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European bourses merge
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March 20, 2000: 11:05 a.m. ET
Amsterdam, Brussels and Paris create largest European bourse.
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LONDON (CNNfn) - The Amsterdam, Brussels and Paris stock exchanges announced plans to merge Monday to form continental Europe's largest stock market in an effort to offset increasing competition from the U.S. and electronic trading systems.
The merger, which will create a exchange with a market capitalization of  2.4 trillion ($2.4 trillion), comes as an eight-strong effort to create a pan-European trading platform appears to be ailing and competition across Europe is expected to intensify this year from rivals such as electronic trading network Tradepoint (TFN) and the U.S. National Association of Securities Dealers, which has said it will set up a European counterpart to Nasdaq.
The merger "is an offensive move not defensive," Jean-Francois Theodore, chief executive of the ParisBourse, told reporters at a news conference here. "Nasdaq is a beautiful brand name but it's not easy being a start-up exchange in this business, take Tradepoint as an example. It has found it difficult attracting companies."
Currently, the Paris stock market has a capitalization of 1.4 trillion, with
Amsterdam valued at 680 billion and Brussels worth just 180 billion.
The new exchange will still trail the London Stock Exchange, which has a 2.8 trillion euro market capitalization. Deutsche Boerse, Germany's stock exchange, has a market cap of about 1.4 trillion.
The venture, launched Monday under the name Euronext, will offer trading in derivatives and futures as well as stocks. The new market will seek a stock market listing by the end of 2000. Contrary to leaked reports, the exchange will not be based on the Canadian model with the trading of derivatives and stocks being split between different capitals.
"This is what our members have been demanding, cross border trading and liquidity," Theodore said. The cost "savings will be huge" with a common information technology and trading network, he added.
 ParisBourse head Jean-Francois Theodore (right) will become chief executive of Euronext and hand over power to his counterpart George Moller (left), president of the Amsterdam Exchanges, after four years. Olivier Lefebvre (center), president of the Brussels Exchanges will become general secretary.
Euronext will use the Paris bourses' NSC equity trading platform and have common software for derivative trading and clearing. Any European bourse considering a merger must "accept our system choice" though other rules can be changed, Theodore said.
Euronext has already been approached by Luxembourg and is in talks with other stock markets. London, Frankfurt, Paris, Milan, Amsterdam, Brussels, Madrid and Zurich began talks for a cross border trading system in 1998 and launched plans in September for a common electronic interface, a plan that fell short of earlier hopes.
"We will continue to work with our partners, our agreements with other bourses will not change because of this merger. This will make it easier for work to progress," Theodore said.
Splits in the alliance
Splits between members of the pan-European alliance have
appeared, with both the London and Frankfurt exchanges preparing to launch
initial public offerings to finance ambitious expansion plans. Werner Seifert, the aggressive chief executive of Deutsche Boerse, warned in January that his company would be announcing acquisitions very shortly.
"We recently stated that consolidation in Europe is necessary and we are
participating in that," the London Stock Exchange said in a statement. "This
could make the process easier." Members of the LSE last week voted to
demutualize and shares are expected to be traded on a "matched" basis
through its broker Cazenove in May. 
--from staff and wire reports
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