On M&A developments around Europe's stock exchanges
July 3, 2006 12:00 AM
By Sharon Bowles MEP in European Parliament
Originally published by Sharon Bowles MEP
By Sharon Bowles MEP in European Parliament
Originally published by Sharon Bowles MEP
I too would like to explore the transatlantic mergers of the stock exchanges. We have seen on the front page of the Financial Times several times and heard from the head of the New York Stock Exchange that it is possible the US Sarbanes-Oxley corporate governance rules could apply to the merged exchange, with jurisdiction in US courts.
Of course not everybody agrees with that analysis. Indeed, at the New York Stock Exchange's second annual securities conference a couple of weeks ago, Commissioner Annette Nazareth of the US Securities and Exchange Commission said that the merger seemed to call for a common technology strategy but not a common exchange platform. So there will be a common holding company under US jurisdiction, but Euronext would not register as a US exchange and would not offer its products on the US market. On that basis, Sarbanes-Oxley, in her opinion, would not apply to Euronext.
However, it would seem to me that neither would the benefits of a merged market, at least from the Euronext side. In fact she said a mere affiliation with a US exchange does not subject a non-US exchange to US law.
However, with all the excitement and interest in cross-Atlantic acquisitions, it seems likely that perhaps something more momentous than a mere affiliation was afoot, at least in the minds of some. Is it possible that some kind of asymmetric process, with the US base parts registering in Europe but not vice versa, may occur? What would be the consequences for the European market?
Commissioner Nazareth was very careful with her words in referring to the technology platform. Is it in fact practical for there to be separate IT platforms in the long term? I doubt it. There would be a desire to integrate and at that stage it would seem Sarbanes-Oxley would surely come into play, which was why she was so careful with her words.
Therefore, unless steps are taken to reach an international standard sooner rather than later, there could well be problems ahead. I would say there is a role for the bureaucrats here as well as the shareholders. In Europe we have experience of having to balance different legal traditions and practices and that is one reason we should be taking the lead in the future of regulation.
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