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State Street And OM Announce Joint Venture To Launch Electronic Execution System In Europe

Date 05/11/1999

State Street Corporation, one of the world's leading specialists serving institutional investors, and the OM Group, a major owner of exchanges and developer of trading technology, announced today (November 4) that they have agreed in principal to launch a new European fixed income electronic execution system, called Bond Connect Europe. State Street and OM will establish a joint venture to manage implementation and marketing of Bond Connect to institutional investors throughout Europe. OM London Exchange, a Recognised Investment Exchange in the United Kingdom will provide the regulatory infrastructure for Bond Connect Europe. Trading in USD denominated fixed income securities, through Bond Connect Europe, will be introduced in the beginning of next year. During the second quarter of 2000, subject to regulatory clearance, Bond Connect Europe will also offer trading in Euro denominated securities. Bond Connect Europe is designed to create an electronic marketplace that overcomes limitations in the traditional trading environment. Operating as a multi-security call auction, Bond Connect Europe will offer institutional investors the ability to execute according to portfolio strategies - using "combined value" or "portfolio" trading - to execute buy and sell orders for multiple securities from different asset classes simultaneously. This unique execution system, "combined value trading", brings together natural contra parties, thus aggregating liquidity and allowing for price discovery and potential price improvement. Bond Connect is currently available in the U.S. through BSE Bond Connect, a wholly owned subsidiary of the Boston Stock Exchange. The U.S. version allows the electronic trading of U.S. taxable fixed-income securities, including corporate debt, government debt, agencies, mortgage-backed securities, and asset-backed securities. Andrew W. Howieson, Senior Vice President and Managing Director of State Street Information Partnerships, said: "We are delighted today to join forces with OM to bring Bond Connect to European institutional investors. OM's extensive knowledge of the European marketplace, its superior technological capabilities and its unique focus on the entire transaction chain, make it an ideal partner for State Street. By combining complementary skills and a common commitment to create transaction solutions based on leading-edge technology, Bond Connect Europe creates a force to be reckoned with in fixed-income securities trading." "OM is pleased to be the exclusive exchange partner in bringing this innovative fixed-income trading application to the European market," said Simon Nathanson, President of the OM Fixed Income Exchange. "Our joint venture with State Street underscores OM's mission to collaborate with forward-thinking companies to provide investors with the world's most efficient market solutions and sets the stage for the creation of a global marketplace." Bridge Information Systems will distribute Bond Connect Europe and currently distributes Bond Connect in the U.S. through its Telerate Plus service. Bond Connect utilizes Telerate's advanced analytical tools and databases for fixed income instruments. Clearing and settlement services are anticipated to be provided in conjunction with Euroclear, the world's largest clearance and settlement system for internationally traded securities. State Street Information Partnerships, a division of State Street Corporation, is focused on the design and implementation of innovative, cost efficient, electronic securities markets using the powerful combined value trading methodology developed by Net Exchange, an affiliate of CalTech. Bond Connect is the first application of combined value trading in the securities markets. With $5.3 trillion in assets under custody and $574 billion under management, State Street Corporation is one of the world's leading specialists in serving institutional investors. State Street has offices world-wide. State Street Corporation' s common stock is traded on the New York Stock Exchange under the symbol STT. For more information, visit State Street's web site at www.statestreet.com. More information on Bond Connect is available on its web site at www.bondconnect.com. OM operates equity and fixed income exchanges in London (the OM London Exchange, which is a Recognised Investment Exchange in the UK) and Stockholm (the OM Fixed Income Exchange and the OM Stockholm Exchange) and develops technology, that increases the efficiency of financial and energy markets throughout the world. OM operates in Europe, North America and Asia, with offices in 15 countries. The parent company, OM Gruppen, is listed on the OM Stockholm Exchange. For more information, visit the OM Group's web site at www.omgroup.com.