German exchange still keen on Euronext deal

By Stewart Fleming

Date: 23/02/06

The German stock exchange Deutsche Börse added to the confusion surrounding the restructuring of Europe's securities trading and clearing and settlement systems this week when it announced that it was still keen to pursue merger talks with its Paris-led rival, Euronext.

Reto Francioni, Deutsche Börse's recently appointed chief executive, said yesterday (22 February) that a merger with Euronext, which owns the Paris, Amsterdam and Brussels exchanges, would be "the most appealing option" for the company and its shareholders. His comments followed a Euronext decision earlier this month to scale back merger talks with Deutsche Börse. Euronext has been openly critical of the structure of Deutsche Börse which includes post-trade clearing and settlement operations in what is described as a "vertical silo" of securities dealing. Separately the Australian Macquarie Bank abandoned on 20 February its £1.5 billion hostile bid for the London Stock Exchange, which Euronext has also been stalking.

On Tuesday (21 February) representatives of major EU banks, as users of post-trade structures, met Internal Market Commissioner Charlie McCreevy to discuss the Commission's plans. The Commission believes streamlining securities trading systems is vital to capitalise on the potential of the single currency.

McCreevy reportedly made it clear that any Commission initiative in the field would be announced in the first half of this year but would avoid addressing the question of how to rationalise market structures and focus instead on ensuring fair access to clearing and settlement systems and adequate supervision.

This would fall short of the public demand made by the London Investment Bankers' Association (LIBA) for Brussels to break up vertical silos. LIBA knows that the Commission has made it clear it does not want to take such radical action.

Article looks at attempts to restructure Europe's securities trading and clearing and settlement systems. The German stock exchange Deutsche Börse announced on 22 Febaruary 2006 that it still wanted to pursue merger talks with its Paris-led rival, Euronext.

• Primary Source