U.S. To Forge Future Of European Financial Markets

The possible arrival of the New York Stock Exchange in Europe via the planned acquisition of Euronext strikes at the heart of ambitions to create a vast European financial market strong enough to challenge Wall Street. After years of jostling and failed talks between the British, French and German markets, the deal-making ability of U.S. operators NYSE and Nasdaq looks set to create a trans-Atlantic, rather than pan-European, trading area.

The New York Stock Exchange Group said June 1 it planned to acquire the European stock market Euronext for about $10 billion (7.7 billion euros) in cash and stock, creating the first trans-Atlantic securities market.

Separately, the technology-heavy Nasdaq has been increasing its stake in the London Stock Exchange. It now holds 25.1% and is the biggest shareholder in the British company.

Political reaction to news of the bid by NYSE for Euronext, which operates markets in Paris, Amsterdam, Brussels and Lisbon, was muted. The German government said that it would have been "desirable" for Euronext to have decided to merge with Deutsche Boerse. French Finance and Economy Minister Thierry Breton vowed to keep an eye on the merger but did not raise any strong objections despite the threat that the Paris stock exchange would fall into U.S. hands. His counterpart in Britain, Chancellor of the Exchequor Gordon Brown, was likely to be pleased by the news. In July last year, he spoke of the need to create a "free trans-Atlantic financial market" during Britain's presidency of the EU last year.

Nevertheless, some were dismayed that U.S. companies had taken the initiative and engineered the consolidation of the European stock market industry after years of on-off talks between European players.

The new group, known as NYSE Euronext, would have its U.S. headquarters in New York and its international headquarters in Paris and Amsterdam. London will be the center of its derivatives business.

Copyright Agence France-Presse, 2006

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