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The Netherlands

Stock exchange to merge with Brussels and Paris exchanges

Paris Bourse, Amsterdam Exchanges and Brussels Exchanges have announced their agreement to create a merger of the Belgian, Dutch and French exchanges. The members of the new Euronext claim that it will be the first fully integrated European exchange, the largest equity options market in Europe, the leader in clearing (central counterparty) in Europe and the largest exchange in euroland by domestic equity trading volume, as well as the leading exchange in Europe for equity and index derivatives.

Euronext will be operated as a new Dutch company. The merger is expected to be finalised in September, and the initial public offering of Euronext is planned for the end of this year.

From each location, 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.

Trading in equities will be based on the French NSC trading system. A new common solution for clearing and settlement will be offered by extending the Clearnet concept that is already operative in Paris and Brussels. There will be one settlement agency, Euroclear in Brussels.

The regulations are expected to be harmonized. However, in practice this may take some time to achieve. Although the securities laws and regulations in each of the countries are largely based on European directives (Investment Services Directive and others), the national legislations differ in their application of these directives.

An independent central securities regulator is not expected in the near future. The ministers of finance of the three countries have announced that the national securities regulators will coordinate their tasks. How this will be done is a challenge, since the extent to which each of the exchanges is supervised by an independent regulator differs considerably.

The new exchange is open to new partners and intends to grow by merging with other exchanges. The exchanges of London, Milan, Madrid and Zurich have been invited to join. The Luxembourg exchange has expressed its intention to join at a later stage.

One decision with regard to harmonization has been taken: the operative language will be English.

Reinout de Waal

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