Stock exchanges finalise Eurobourse IT strategy

The eight European stock exchanges have finally agreed on a model for a pan-European trading system.

Negotiations had almost broken down over whose technology should be used as the basis for a common trading interface, but yesterday the groups' chairmen declared their intentions to develop a new standard from scratch.

Frankfurt and London had been pushing to adopt Frankfurt's Xetra system as the standard, but they backed down at a top-level meeting in Brussels yesterday in favour of a more egalitarian approach.

The group set a deadline of November 2000 for trading European blue-chip stocks electronically. It will now be up to each bourse - Amsterdam, Brussels, Frankfurt, London, Madrid, Milan, Paris and Switzerland - to negotiate a standard and build it into their existing software.

The electronic market model aims to simplify the trading process to reduce risks and costs and attract large volumes of trade. It will be accompanied by a set of common business rules.
Martin Watkins, business manager at Cap Gemini, said the November 2000 implementation date was ambitious as there were eight different regulators involved. "Getting the technology in place will be the least of their problems," he told Silicon.com. "The difficulty will be in getting the business decisions ready in time, to get the technology right."

He cited central counter-parties in all European countries as one necessity for electronic trading. "Central counter-parties act as intermediaries in a trade, and take on the risk," he said. "This is especially important when large volumes of shares are being traded, but not all European countries have one yet."