By Aline van Duyn, Bayan Rahman and John Labate
Published: June 7 2000 17:44GMT
Ten equity exchanges, including the world's biggest in New
York, are
planning to create a global stock market to trade blue-chip
shares
around the clock.
The New York, Tokyo, Amsterdam, Brussels, Paris, Australia,
Hong Kong,
Toronto, Mexico and Sao Paolo exchanges are in talks to
connect their
trading systems and develop a common set of trading rules.
The discussions are expected to result in a "blueprint" for
the alliance
by the end of the summer, although details of how the scheme
will work
and provide cost savings are vague at this stage.
Richard Grasso, NYSE chairman, said in an interview on the
floor of the
exchange:
"The idea is that each of the partners will retain their
brands and
lists [of stocks] and then plug into the global
partnership."
The talks come amid increasing global consolidation as
investors demand
more liquidity and lower costs. London and Frankfurt bourses
plan to
merge, forming iX, Europe's largest stock market, which will
include
Nasdaq for technology stocks. This month Nasdaq Japan will
be launched
in a partnership between Softbank, Nasdaq and the Osaka
Securities
Exchange.
The move to create the Global Equity Markets (GEM) means
there are now
two broad exchange alliances fighting to dominate the global
equity
markets. Other exchanges will be vying to link with either
GEM or iX.
There are, however, key differences between the two: iX is
planning a
complete merger, but GEM's ambitions are more modest.
Discussions at the 10 exchanges are expected to focus on
using the same
trading technology, probably the NSC system developed by the
Paris stock
exchange. This is already used by the three Euronext
exchanges
(Amsterdam, Brussels and Paris), Toronto and Sao Paolo.
The use of one central counterparty is also under
discussion. This would
allow banks and institutions active in different markets to
net or
offset positions against each other and thus reduce their
cash outlays
for equity holdings.
The announcement will no doubt intensify the already heated
rivalry
between the NYSE and Nasdaq as these giants - the first
and
second-largest exchanges in the world by market
capitalisation - try to
capture business outside the US.
For the Tokyo exchange, the discussions are crucial as
Nasdaq Japan
plans to link with Nasdaq Europe and to the US, leading to a
24-hour
trading system. The TSE also hopes to benefit from the
increase in
foreign investors in the Tokyo market.
Yasuyuki Konuma of the TSE's business development section.
said: "The
number of foreign investors in Japan has dramatically
increased so we
need to think about how to encourage that.
"Another factor is that the technology makes a global equity
market
possible."
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