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Capital Markets

Discontented Dutch brokers prompt foreign intervention

One exchange's successful capture of liquidity from another is a rare event. So why are both the London Stock Exchange and the Deutsche Börse attempting to take Dutch equities business away from Euronext? Peter Koh reports

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THE DUTCH CASH equities market has become the latest battlefield in the war between Europe's largest exchange groups, with both Deutsche Börse and London Stock Exchange launching services to steal trading in Dutch stocks from the incumbent French-led Euronext group. If successful, the LSE proposal could have profound implications for the shape of Europe's cash trading market structure.

Curiously, industry support for the efforts has been vocal, despite the fact that virtually no-one outside Deutsche Börse or LSE thinks either exchange's service has much hope of great success.

The Dutch equities market probably hasn't attracted so much attention since it began as the world's first about 400 years ago. Dutch brokers today, however, are a particularly discontented lot, having lost much when Amsterdam Exchanges joined the exchanges of Paris and Brussels to form Euronext in 2000. They lost their national exchange, their floor and their hoekmen (specialists), and saw their costs rise as they adopted the Paris exchange's NSC electronic trading system. They also encountered technical problems, suffered a loss of liquidity in smaller stocks, and found themselves struggling for adequate attention from senior managers based in Paris.

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