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London May Announce Stock Merger

May 2, 2000

LONDON (AP) _ The London Stock Exchange expects to announce this week that it is uniting with its chief continental rival, Germany’s Deutsche Boerse, sources close to the merger talks said today.

The U.S. Nasdaq Stock Market will hold an unspecified stake in the combined exchange, marking a further step in efforts to create a seamless global market for the cheapest possible trading of shares, according to the sources, speaking on condition of anonymity.

The London and Frankfurt exchanges each will hold equal shares in the new Anglo-German exchange, the sources said.

The Deutsche Boerse has already approved the deal, according to one source. The London Stock Exchange planned to approve the merger today, and an announcement could come as early as Wednesday, the sources said.

The two exchanges _ the largest in Europe _ began trying to form the nucleus of a pan-European stock market two years ago. They later expanded their plan to include six other national stock markets.

The effort foundered when London and Frankfurt apparently failed to reach agreement over issues of ownership and the type of trading platform to be used in a regional exchange.

It was not immediately clear how the two exchanges resolved their differences over the trading platform. The Wall Street Journal reported today that the new entity would use the Deutsche Boerse’s electronic trading system.

Pressure on Europe’s national stock exchanges to consolidate has intensified due to the introduction last year of a single European currency, the euro, together with competition from U.S. markets and electronic share-trading networks.

Last month, a three-way regional exchange was formed by stock markets in Paris, Brussels and Amsterdam.

Nasdaq, the world’s largest stock market, already has undertaken to link up with markets in Europe. It unveiled a plan in November to create an Internet-based European network called Nasdaq-Europe.

The network, scheduled to begin operating late this year, is aimed at helping the region’s high-growth companies raise money while also making it easier for Europeans to invest in blue-chip American and Asian stocks.

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