Under the arrangements, which are subject to shareholder approval: Tradepoint will be renamed virt-x ; SWX will transfer all the trading of its blue chip shares to the market for pan-European blue chips operated by virt-x ; The EBS trading platform will be made exclusively available to virt-x by SWX for the trading of European blue chips under a facilities management agreement; SWX members will become members of virt-x and will transact their trading of Swiss blue chips at virt-x; All trading will be conducted within a single regulatory environment, supervised by the FSA; SWX will become a shareholder in virt-x; LCH, Euroclear, SIS and Crest will provide full central counterparty and clearing and settlement infrastructure on an integrated basis.
It is expected that the transaction will be completed, subject to detailed negotiations and regulatory approvals, during the third quarter. Following completion, it is anticipated that SWX will hold directly or indirectly, some 38% of Tradepoint renamed as virt-x and the Tradepoint Consortium would hold the same percentage.
virt-x will be based in London, and have a Board of Directors consisting of representatives of SWX, the Tradepoint Consortium and executive management, together with a number of independent directors. Peter Stevens will continue as Chairman. Richard Kilsby will be Vice Chairman. Antoinette Hunziker-Ebneter will head the management team as CEO.
virt-x will combine Tradepoint's pan-European blue chip market, which was launched today, with SWX's highly functional EBS trading system to create a fully integrated pan-European exchange. This will support trading of the constituents of all the major European indices by the end of the first quarter of 2001. As part of the arrangement SWX will transfer trading in all of the SMI index stocks - which have an average daily turnover value of CHF 3.4 billion - onto virt-x, giving the new exchange immediate critical mass in the European blue chip equity market. Swiss and UK stocks that are not constituents of the blue chip European indices will continue to be traded on the existing SWX and Tradepoint platforms.
Using Tradepoint Financial Networks plc as the vehicle for virt-x plc will allow the virt-x exchange to maintain Tradepoint's Recognised Investment Exchange status. As such, Tradepoint has already been designated as a Regulated Market throughout Europe under the Investment Services Directive, allowing it and in the future, virt-x to offer trading in the shares of companies listed by a Competent Authority or other approved organisation.
virt-x will offer its European and US members the following advantages: direct trading in the constituents of all major European indices on one exchange with one rule book; an electronic anonymous order book; a fully integrated trading, clearing and settlement model with a central counterparty for cross border trading provided by London Clearing House; significant scope for cost savings multi-currency capability
In support of the transaction the Tradepoint Consortium is demonstrating its confidence in virt-x by committing to exercise all its outstanding warrants thereby providing further funding of some £18m.
Commenting on today's announcement Richard Kilsby, Chief Executive of Tradepoint, said: "We have been working very hard during the last year to establish Tradepoint as the first pan-European equity market. Today's launch of Tradepoint Europe is a significant milestone. virt-x now gives us the opportunity to take our European platform to the next stage by creating a market with a state of the art trading system and significant existing liquidity."
Antoinette Hunziker-Ebneter, Chief Executive of the SWX Swiss Exchange, said: "Combining SWX's trading platform and its blue chip volume with Tradepoint's pan-European market will create an exchange that will offer virt-x's members a highly efficient and liquid trading and clearing and settlement infrastructure for major European equities that is not available on any of the other existing European exchanges.
"The creation of virt-x is a major step forward for pan-European equity trading.
"virt-x is an exchange designed to meet the specific requirements of the market participants. It will be a liquid pan-European exchange for trading blue chip stocks operating under a single regulatory environment and supported by an integrated trading, clearing and settlement infrastructure. virt-x will have a position at the centre of European blue chip trading." .
Duncan Paterson, Chief Operating Officer of the Tradepoint Consortium,said "When virt-x is launched early next year it will be based on a very high volume pan-European platform that is already up and running and it will have immediate critical mass in European blue chips. This latest development is another step towards achieving the Consortium's stated objective of developing Tradepoint, now virt-x, as the principal marketplace for trading the EuroTop 300 by the end of 2001."
Doug Atkin, Chairman of the Tradepoint Consortium added "The fact that Tradepoint is in a position to participate in such a ground breaking venture is testimony to the many achievements that it has made since the Consortium acquired its 54% stake in the company a year ago."
