Frankfurt, London Stock Exchanges To Merge; Nasdaq Participates

The London Stock Exchange and Frankfurt’s Deutsche Boerse announced today that they had finally agreed on merger terms after 18 months of negotiations. The move will create the world’s second largest stock market with €6.5 trillion ($5.95 trillion) in value, topped only by the NYSE with $12 trillion.

With head offices in London, IX, for International Exchange, as the new market will be called, expects to begin joint operations by the end of the summer. According to the BBC, London will be primarily responsible for trading traditional securities or “blue chips,” and Frankfurt will handle newer issues and “high tech” shares.

Nasdaq, which had announced plans to open a rival pan-European exchange, has agreed instead to join forces with the new market, and will become a 10 percent stakeholder, in exchange for an equivalent amount of its shares to be held by IX. Nasdaq listings will be handled primarily in Frankfurt. Initially the exchange will trade in three currencies £’s, DM’s and Euros.

Commenting on the news conference he had just attended, BBC correspondent Mike Fox said “It’s entirely possible that there will be further consolidation. Representatives from the Milan and Madrid stock exchanges attended the meetings. There’s a lot of speculation about a ‘pan-European exchange’ right now.”