Deutsche Borse in challenge to London
Deutsche Borse, the Frankfurt stock exchange, is to drop its German name and rebrand itself Euroboard in a direct challenge to London's traditional pre-eminence as Europe's biggest and most international stock market.
The plans, approved by the BÃ¶rse's supervisory board yesterday, will be backed by initiatives to attract trade in Europe's top 500 blue-chip stocks to Frankfurt and come ahead of a full public listing. The BÃ¶rse said it would list on its own growth companies market, the Neuer Markt, with a price tag of around 2bn euros before June.
Werner Seifert, the chief executive, said the offering - the first by a main stock exchange - would give the BÃ¶rse a benchmark value and a currency to use in the wave of mergers expected to sweep Europe. Although he ruled out joiningthe Euronext Alliance, Mr Seifert gave a nod towards London:"Whether we will be competitors or partners it is not for me to say. But we hold the London Stock Exchange in high regard."
The London Stock Exchange is also shedding its mutual status and also maintains that this will help it play a leading role in any consolidation.
Mr Seifert said that last week's Euronext deal was just the start. He sees further mergers before November, when common European rules for trading blue chips should sharpen competition between exchanges.
"Consolidation could happen more quickly. I wouldn't be surprised if additional steps will be taken. Everyone had their own national agenda. The large international intermediaries said that it was going too slowly. Now I am optimistic that the international barriers will disappear soon."
With Europe's two largest exchanges heading in similar directions, speculation over a tie-up between London and Frankfurt is likely to intensify. However, Mr Seifert was keen to say that Frankfurt was setting the pace. The LSE has stopped short of a public offering. It has settled for a daily off-market dealing system run by Cazenove, the broker, and the LSE is also capping individual shareholdings at 4.9 per cent.
The Germans are removing all limits on shareholdings and hope the offering will release the exchange from its traditional dominance by the big German houses. Ultimately it is expected that Frankfurt will be owned by the big international trading houses.
Underlying Frankfurt's financial strength the exchange revealed a 75.9 per cent jump in profits to 74.5m euros last year. Eurex, Deutsche BÃ¶rse's futures arm, has already overtaken Liffe to be the world's largest derivatives market. It also has London well in its sights in stock market terms as well.
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