2008 At The Luxembourg Stock Exchange

In 2008, the Luxembourg Stock Exchange maintained its dynamic listing activity with a total of 11,651 new securities being admitted to the official list. The main segments of newly listed securities were fixed income (7,318 units) investment funds (1,535 units) and warrants (2,771 units).

As at 31 December 2008, the Luxembourg Stock Exchange held 49,097 quotation lines against 45,573 in 2007. This represents a net growth after delistings of 7.73% for the year, a significant increase in view of the current difficult environment. The main growth segments, were fixed income (+1,464 units), warrants (+1,301 units), and investment funds (+761 units).

On the two markets that it operates; the main EU regulated market and the Euro MTF market, 43,876 securities were listed on the regulated market and 5,221 were listed on the Euro MTF market. The largest segments were fixed income, with 32,933 lines, and investment funds, with 8,133 lines.

This growth is evidence of the attractiveness of the Luxembourg financial centre for admissions to trading of international securities. Despite a noticeable slowing down of listing activities from October 2008, the Luxembourg Stock Exchange retains its leading position in terms of the number of domestic and international bonds listed by a European exchange. On an international level, the Exchange is the leading European listing centre for Global Depositary Receipts.

During the year, the LuxX index declined by 59.45% The index was particularly affected by the ongoing financial crisis due to the preponderance of banks and financial companies making up the index. Eight out of the nine constituent companies in the index, of which five are banks or financial companies, finished the year with negative performance.

The highest level of the LuxX was on 2 January 2008 at 2402.16 points. The lowest level was reached on 21 November at 905.52 points (see chart below).

In March 2008, a clearing and settlement structure, which included the introduction of Central Counterparty (CCP) services, was launched. The first trades under the new structure were executed on Friday, 14 March 2008 and were successfully settled on Wednesday, 19 March 2008.

The new model was established with LCH.Clearnet SA as CCP. An innovative structure allows participants to use both ICSDs (International Central Securities Depositories) to settle trades: Clearstream Banking Luxembourg and Euroclear Bank.

CCP services allow investors to trade on the Luxembourg Stock Exchange using industry best practices, and therefore strengthen post-trade efficiency. This clearing and settlement structure was set up as part of the long-term strategy of the Luxembourg Stock Exchange that aims at increasing both trading volumes and liquidity.

Trading volumes on the secondary market increased during 2008 and finished the year at an amount of EUR 1,414.24 million. Increases in volumes were in the share and warrant segments.

The Luxembourg Stock Exchange is committed to greater transparency as regards its listed securities. In this respect, the Exchange continued the development of its range of financial information products and services.

Enhancements were made in the dissemination services of the Luxembourg Stock Exchange and on its website. Most of these improvements related to dissemination of documents and financial information from issuers. Changes included the introduction of RSS feeds and the dissemination of documents such as prospectuses was also improved with the introduction of an online delivery facility for data vendors.

A new consultation service has been available since December 2008 for fixed income continuous trading, with the presence of market makers. This service is available on the website of the Luxembourg Stock Exchange under the section: Fixed income continuous trading / Obligations en négociation continue. The service displays the firm orders of buyers and sellers for the fixed income securities concerned.

A noteworthy area of activity in 2008 involved the offering of publication and reporting systems. This is one part of a group of services that will allow Luxembourg Stock Exchange and CCLux to be better positioned in their service offering for all market participants and to face the current unsettled situation in a stronger position. It is designed to meet the needs of members, issuers, investors and more generally industry stakeholders such as investment fund promoters and service providers as well as other financial sector professionals. These enhancements to the infrastructure are part of an ongoing long-term strategy set out several years ago.

The Luxembourg Stock Exchange introduced an improved “Financial News Service” in order for issuers to publish and disseminate notices and press releases. This publication service is particularly important for price-sensitive information that must be published rapidly.

Work was completed on its new OAM (Officially Appointed Mechanism) service, which became active on 1 January 2009. This service enables issuers or their representatives to file documents containing “Regulated Information” as defined in the Luxembourg law of 11 January 2008. These documents are centrally archived and are accessible to the public free of charge on the Luxembourg Stock Exchange website. This central document storage service is a regulated activity.

In addition, the Luxembourg Stock Exchange and CCLux expanded the use of their “e-file” document collection and exchange application to respond to new regulatory reporting requirements for banks, financial sector professionals and investment funds. This application facilitates the registration of financial instruments offered to the public and the sending of regulatory reports to the authorities. For regulatory reporting, e-file allows Luxembourg entities to send reports to the Luxembourg financial sector supervisor (the CSSF) and the Luxembourg central bank.

The Luxembourg Stock Exchange and Tokyo Stock Exchange signed a memorandum of understanding on 12 October 2008.

In so doing both exchanges signalled their intention of to work together in the future. Under the terms of the memorandum, both exchanges agreed to foster a closer relationship and explore opportunities for exchanging information and working on the development and the listing of financial products.

Important new listings in the share and fixed income segments took place in 2008.

On 4 December 2008, the Luxembourg Stock Exchange commenced secondary trading of a bond issue of the Grand Duchy of Luxembourg for an amount of EUR 2,000,000,000. This issue is the largest amount ever issued by the Luxembourg state and follows the very successful primary offer period that was mainly addressed to retail investors and carried out between 10 November and 20 November 2008. This was the first Luxembourg sovereign bond that is available to investors in 16 years.

In the share segment, the shares of Reinet Investments S.C.A., a Luxembourg-registered company, were admitted to trading on 21 October 2008. On the first day of trading, a record number of trades were recorded on the NSC® trading platform operated by the Luxembourg Stock Exchange. Trading volumes for this security continued to be strong to the end of the year.

Also in the share segment, the first SICAR (Société d’investissement en capital à risque ) was listed. This took place on the Euro MTF market on 9 October 2008. SICARs are vehicles that are dedicated to investments in venture capital and private equity whose securities are targeted at experienced investors.

The Stock Exchange Day took place on 10 April 2008 at the Hemicycle in the Conference Centre of Luxembourg-Kirchberg and was attended by 800 guests drawn from Luxembourg’s economic, social and financial circles.

The guest speaker of the evening was Michel Pébereau, Chairman of the Supervisory Board of BNP Paribas, who delivered a speech entitled “The subprime crisis and strategies to deal with it”.

The Luxembourg Stock Exchange was actively involved in the promotion of the Luxembourg financial centre in 2008. It participated in missions organised by Luxembourg for Finance for promoting the activities of the Luxembourg financial centre abroad. In addition, it welcomed a number of international delegations to its premises.

It was especially active in the promotion of its activities in India, an important international client base for the Luxembourg Stock Exchange. It likewise actively participated in the works and initiatives of PROFIL, the Luxembourg Financial Industry Federation, and contributed in the organisation of the Luxembourg Financial Forum of 30 May 2008.