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Euro e-exchange planned
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February 8, 2000: 9:17 a.m. ET
Morgan Stanley, Sweden's OM Gruppen aim for $99M online trading venture
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LONDON (CNNfn) - OM Gruppen, the owner and operator of the Swedish Stock Exchange, and Morgan Stanley Dean Witter said Tuesday they plan to launch an online European exchange that they predict will soon become the trading portal of choice for half of Europe's retail investors. The announcement sent shares of OM Gruppen soaring 32 percent in Stockholm.
The 100 million-euro ($99 million) venture, known as Jiway, is slated for launch in September. Its trading and settlement services will initially be available to brokers in the United Kingdom, Germany and Sweden, before branching out to France, Switzerland, Italy and Holland in 2001, the companies said in a statement.
Morgan Stanley Dean Witter (MWD: Research, Estimates) will take a 40-percent stake in the project and has agreed to serve as an initial "market maker" - meaning it will put up the start-up liquidity needed to get the platform running. OM Gruppen will own the rest of the business.
The Swedish company's stock rocketed 48 Swedish crowns to 404 crowns Tuesday in Stockholm.
Jiway aims to create a screen-based electronic market offering a single access point to thousands of U.S. and European shares. With this goal in mind, the companies have chosen to base their new venture in London, which has been facing a mounting challenge from Frankfurt for the title of Europe's financial capital. Jiway said it is seeking formal recognition in the United Kingdom from the Financial Services Authority, Britain's financial industry watchdog.
The company predicted it would attract 50 percent of all online cross-border retail share trading within two years and become the "most efficient" execution point for small orders in Europe. Whether that goal is achieved, the partners are likely to face stiff competition from a growing constellation of trading platforms with pan-European ambitions.
These include Britain's Tradepoint exchange, part-owned by a consortium of global investment houses, Belgium-based Easdaq, focused on international growth and high-tech companies, and the soon-to-be-launched Nasdaq Europe, an offshoot of the U.S. exchange for high-growth companies. While each of these platforms differs in the nuances of their mission, they all share a common objective: to reduce the cost and complexity of trading equities in increasingly global stock markets.
David Walker, the chairman of Morgan Stanley Dean Witter in Europe, said his investment house expects online trading volumes to triple by 2003, with cross-border trade playing a key role in the overall growth picture.
Per Larsson, the board director of Jiway and chief executive of OM Gruppen, seconded this sentiment Tuesday.
"OM and Morgan Stanley both see a huge demand for cross-border and online trading as well as increased trading by private investors," Larsson said in a statement.
OM Gruppen said the launch of the new Internet platform would cut its profit per share by one Swedish crown in 2000. Deputy Chief Executive Magnus Karlsson said he expected the venture to break even in its second year.
The star-up costs include a 400-million Swedish crown ($46.32 million) equipment order by OM Technology, the business division that will operate Jiway, Reuters reported. 
--from staff and wire reports
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