Unanimously approved by the boards of the respective exchanges and signed on Saturday 18 March by the three presidents, EURONEXT will be the driver of the consolidation process for European equities and derivatives trading and clearing which the international financial community is looking for. EURONEXT will be incorporated as a new Dutch company with a two-tier governance structure: a Supervisory Board of twelve who will represent the interests of all participants including investors, and a Managing Board of three.
The Managing Board will comprise the presidents of the three former exchanges - Jean-François Théodore, who will be the first Chairman and CEO, mandated for four years, George Möller COO, and Olivier Lefebvre, General Secretary. The supervisory authorities of the three exchanges have been informed. Final arrangements will be subject to their approval.
This first merger of independent national exchanges will create the largest exchange in continental Europe with more than 1,300 domestic listed companies representing a total market capitalisation of ¤ 2,380 bn. The value of equities traded on the three exchanges during 1999 totalled ¤ 1,453 bn. EURONEXT will also be the largest equity and index options market in Europe with over 230 million contracts traded in 1999.
EURONEXT will provide investors, issuers and intermediaries with a complete range of services from listing and trading in equities, bonds and derivatives to netting, clearing, settlement and custody, responding to the growing expectations of investors for the development of a single European stock market.
EURONEXT will offer single membership. Existing members of each of the three exchanges cash or derivatives markets will become members of the new exchange's cash or derivatives markets. For issuers and listed companies alike, the size and breadth of the market, and the consequent liquidity and distribution it affords make it a very attractive environment, not just for European companies but for major global corporations seeking a European listing.
EURONEXT will perform all the key functions of the different exchanges and will be organised on a business line model. The heads of the business lines will be based in the three financial centres, ensuring both a balanced responsibility and synergies in operating EURONEXT. Trading in equities will be based on the French NSC trading system already in place in Paris and Brussels. A new common solution for clearing and settlement will be offered by extending the concept of CLEARNET. Clearing for all products will be based on Clearing 21®, the most advanced software system. There will be one settlement agency, for which Euroclear is the first choice, subject to the conclusion of ongoing discussions.
From each location EURONEXT will offer the complete range of market services, including listings. As well as its international offering, EURONEXT will maintain a strong presence in its three home markets. Using their existing licences, its subsidiaries will be able to provide a service to existing quoted companies and candidates for listing in the Dutch, Belgian and French markets, catering both to institutional and retail investors, and providing full access to all its services.
A Steering Committee, led by the members of the Managing Board, has been established to manage the integration process. It will operate from now until completion of the merger, planned for September of this year.
Shareholders of AEX, BXS, and ParisBourseSBF SA will be asked to exchange their current shareholdings for shares in EURONEXT which will be aiming for a public listing by the end of this year.
In the context of the Alliance of eight European exchanges, EURONEXT will continue to pursue the goal of a pan-European trading infrastructure and to maintain the current alliances that each of the former exchanges has in place with other parties.
The new exchange is open to new partners and intends to grow by merging with exchanges and/or acquiring other companies operating in the same field. Luxembourg has expressed its intention to join at a later stage.
"This merger is a major breakthrough in the history of exchanges and a step forward in ending the fragmentation of European markets. It shows that partners sharing the same European vision are able to team up in order to create an innovative structure. I am particularly proud of being associated with George and Olivier in this venture", said Jean-François Théodore.
"I am very excited about this initiative. As part of EURONEXT, I can look to the future with confidence. I am proud to be part of it. I am confident the combined talent of our staff will create a success. EURONEXT is a challenge for all of us", said George Möller.
"Combining a strong international dimension with substantial home market strength is the key to the successful integration of the European capital markets. By doing this, EURONEXT will maximise value for its shareholders and for all market participants", said Olivier Lefebvre.
The three exchanges have been advised by ABN AMRO.
