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Opinion

Exchanges prepare to deregulate to protect Eurobond

EU stock exchanges are taking action to stop issuers deserting them because of cost increases caused by the impending Prospectus Directive.

The stock exchanges in London and Luxembourg have struck back in their battle with non-EU exchanges for domination of Eurobond listings once the EU's Prospectus Directive takes effect on July 1.

They have both unveiled a strategy for dealing with competition from rivals, several of which aim to attract non-EU issuers by offering a chance to avoid new EU regulation.

Both London and Luxembourg propose to sidestep the parts of the Prospectus Directive that are unappealing to issuers.

The stakes are high, with many issuers intent on avoiding the Prospectus Directive and its requirement for an expensive retail-style prospectus for all bond deals with denominations of less than €1,000. At the same time, the EU's Transparency Directive will, from 2006, require even foreign issuers to report under International Accounting Standards (IAS) if they list on EU exchanges.

Swiss rules

The Swiss Exchange (SWX) staked its claim for a bigger market share with a new set of rules that took effect on February 1 and listed its first Eurobond, a $125 million deal for Banco Itaú, at the end of March. SWX's rules mimic the pre-Prospectus-Directive Eurobond listing regime in Luxembourg and London.

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