Unifying Europe's Stock Markets

Breaching the national interests of the European Union’s member states so that the 15-member body begins working as one has been a elusive goal for Europe’s capitals.

Finding commong footing on foreign and military policy has met defeat often in the EU’s history and attempts within the last four years to merge some of the the region’s stock markets has routinely come up zeros.

Frits Bolkestein wants to change all of that.

Ahead of the European Union’s annual summit this weekend in Barcelona, the European Commissioner for the Internal Market told the Frankfurt Allgemeine Zeitung that he wants the EU to move quicker in developing a uniform financial market.

"We have about 30 stock exchanges in Europe," he said. "Simply way too many."

The goal is to embark on a merge mania that would reduce Europe’s 30 exchanges to "about half a dozen" in the next 10 or 12 years, said Bolkestein. The merged stock exchanges would cut costs, and offer overseas investors and firms an attractive place to list that would rival the New York Stock Exchange and the NASDAQ. A uniform market system in Europe woould also allow EU companies to be able to access capital just as easily as their US counterparts.

Easier said than done.

Trying but not succeeding

Since the late 1990s, Europe’s major stock exchanges have made several fruitless attempts to come together. Harmonizing electronic trading systems and trading rules have been among the main obstacles.

The most public of the examples was the failed attempt by Frankfurt’s Deutche Bourse and the London Stock Exchange to merge in 2000. The two came tantalizing close to completing the deal but were upset at the last moment by a sudden, and vigorous bid by Swedish electronic trading company OM Gruppen which cooled relations between the two financial capitals.

The merger was supposed to put Europe’s stock exchanges on a merger pace bouyed by the introduction of the common currency in 1998. But only Euronext, a joining of the smaller Amsterdam, Brussels and Paris stock exchanges, has met any success.

The grouping successfully bought London’s futures and options exchange, Liffe, which spurned the larger London Stock Exchange for close to 900 million euro cash.

NASDAQ comes to Europe

The dream of a uniform financial market in Europe suffered further setbacks in 2001, when the US Nasdaq bought Easdaq. The new market exchange was started in 1996 as an attempt to unify European stock markets and take advantage of the dot.com boom that helped make Nasdaq into the second biggest stock exchange on earth.

The purchase meant fierce competition for European stock exchanges as it convinced ist US clients to list in Europe as well as New York.

Bolkestein said more merging in Europe would also bring more competition. And London and Frankfurt would not necessarily share the elite status they now do.

"I don’t know if London or Frankfurt will be among the winners," Bolkestein told the Frankfurt paper. "The competitiong, though, is certainly good for both."