2000 Leading stock exchanges plan merger

The London Stock Exchange and Germany’s Deutsche Boerse have confirmed they are to merge, creating the world’s second largest stock market.

The combined firms will be called iX, standing for International Exchanges.

Stock markets across Europe are already planning to group together in response to the international movement of capital.

The Paris Bourse recently announced its intention to merge with the Brussels and Amsterdam stock exchanges and rename itself Euronext. Norway, Sweden and Denmark are pooling their exchanges, too.

The London-Frankfurt venture would initially be traded in their home currencies, with a view to moving eventually to an entirely euro-based exchange.

But there could be dangers for British pensioners. The pension fund industry has warned that if firms are forced to price their shares in euros it would mean bigger risks for British investors and extra costs, too.

London Stock Exchange chief executive Gavin Casey, who will step down once the merger goes through, tried to reassure sceptics saying the plan had been driven by what customers wanted and it would build on the strengths of both organisations.

At a press conference with London stock exchange chairmen Don Cruickshank, Werner Seifert, chief executive of Deutsche Boerse and prospective chief executive of iX, emphasised the “open” nature of the agreement, particularly where other exchanges were concerned.

There are also plans to link up with New York’s hi-tech exchange Nasdaq which could pave the way for a unified global stock exchange.

Nasdaq already has agreements with markets in Japan, Hong Kong and Singapore.

The merger is expected to be completed by autumn 2000.

Courtesy BBC News

In context

Just four months later, the merger between the two exchanges floundered.

Many of its prospective clients in the UK said there would be confusion about how iX was regulated and were unhappy that trading would eventually be carried out in euros.

Added to this, on 29 August Swedish technology company OM Group launched a hostile bid to take over the LSE. The bid failed but, as a result, the LSE board decided to drop plans for iX.

Gavin Casey resigned as chief executive and his place was taken by Clara Furse, the first woman head of the LSE.

Under her direction, the LSE tried to take over the London derivatives exchange, Liffe. It was beaten by Euronext, a consortium of leading exchanges in Paris, Brussels and Amsterdam, created in September 2000.

In April 2006 the US Nasdaq Stock Market bought a 15% share in the LSE. Two weeks later the New York Stock Exchange was reported to have made an offer to take over the LSE.