London, Frankfurt Bourses to Merge

The London and Frankfurt stock exchanges said on Wednesday they would merge to create the biggest European stock market and link up with the US technology-heavy NASDAQ market in a global trading platform.

The London Stock Exchange (LSE) and Deutsche Boerse will be equal partners in the new exchange, to be called iX International Exchanges.

The merger of equals is to be completed this autumn and will handle 53 per cent of the total European share trading volume. With Eurex, Frankfurt's derivatives exchange, it will be the biggest derivatives market worldwide.

The London-based iX will account for 53 per cent of European share trading and 80 per cent of European technology trading. It will be capitalized at about US$4 trillion.

Initially, stocks will trade in their home currencies eventually moving to an entirely euro-based exchange.

The market, which is expected to become operational next year, will be the world's second largest after the New York Stock Exchange.

The LSE and Deutsche Boerse said the Milan and Madrid exchanges would join the bourse early next year and that others could sign up soon. Switzerland's stock exchange for its part said it would study the iX plans before making a final decision.

Separately, the British and German exchanges announced their intention to link up iX in a 50-50 venture with the US technology-heavy NASDAQ market, the world's second largest exchange.

The alliance is aimed at providing a globally linked pan-European market for listing and trading initial public offerings, US and Asian and other international securities and "new economy" stocks from across Europe.

NASDAQ said it was working towards creating a global around the clock share trading platform.

NASDAQ chief executive Frank Zarb said, "We really are going to see the reality of a global exchange, because NASDAQ here in Europe will be interconnected with NASDAQ US and by the end of the year will be interconnected with NASDAQ Japan.

"So we are going to have a high-growth market that is truly international for the first time," he said. NASDAQ Japan is scheduled to begin operating at the end of May.



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