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Problems Seen in Linking Exchanges

May 19, 2000

HONG KONG (AP) _ The top U.S. securities regulator said Friday that sharp differences in the way markets operate could hinder the ability of stock exchanges to combine operations.

``I have a certain skepticism about the ability to merge stock exchanges, which is as difficult as merging Syria and Israel,″ said Arthur Levitt, chairman of the U.S. Securities and Exchange Commission.

There are simply too many variations in the way markets are run locally to make mergers easy, Levitt told an audience of business leaders.

The stock exchanges in London and Frankfurt said earlier this month they planned to merge, and they are in talks about bringing the smaller markets in Milan and Madrid aboard.

Last month, the exchanges in Paris, Brussels and Amsterdam had agreed to form a three-way regional exchange, though they were unable to get London, the biggest market in Europe, to join their group.

Despite the likely difficulties in combining markets, Levitt said he expects to see more mergers and more electronic trading in the future. He added that he expects within the next five years to see a globalized electronic trading system.

``The open outcry system has been replaced, to a great extent, by the silent screen,″ he said.

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