Euronext puts off merger talks with Frankfurt

13 January 2006

BRUSSELS — Brussels’ Euronext stock exchange has put its proposed merger with Frankfurt’s Deutsche Boerse on hold over regulatory issues. Sources say that if the two exchanges – both companies in themselves – were to merge, they would have to dispose of their derivatives markets and other holdings.

While neither side would not comment on the reports, insiders say the talks between the two had been at a very early stage, and that the door is not yet closed on possible further discussions.

The main impulse for the merger talks came from hedge funds – which buy shares on many different stock markets in order to guarantee their customers a fixed profit – that are active both on Euronext and the German stock exchange.

Deutsche Boerse had apparently offered to put Euronext-manager Jean-François Théodore in charge of the new holding, although the home of the merged stock exchange had yet to be discussed.

Earlier, Deutsche Boerse had already tried to take over the London stock exchange, but that was called off after protest of these Hedge funds.

Meanwhile, Euronext is still waiting for the UK cartel authorities to name the conditions under which it could make an offer for the London Stock Exchange.

Euronext is a pan-European stock exchange with subsidiaries in Belgium, France, the Netherlands, Portugal and the United Kingdom. In addition to equity and derivatives markets, the Euronext group provides clearing and information services.

Euronext was formed in September 2000 in a merger of the stock exchanges of Amsterdam, Brussels and Paris in order to take advantage of the EU harmonisation of financial markets.

In 2002, the group merged with the Portuguese stock exchange BVLP and the London based futures and options exchange LIFFE. LIFFE is the subsidiary of Euronext responsible for all options and futures contracts trading, formed by the merger of the derivatives activities of the various constituents of Euronext with LIFFE.

Subject: Belgian news