Table of Contents

Notes on Revelation

Global Stock Market

11 Tishri, 5762
September 28, 2001

GEM = global equity market

Webster's Ninth New Collegiate Dictionary:
gem: jewel; a precious or sometimes semiprecious stone cut and polished for ornament; something prized esp. for great beauty or perfection; a highly prized or well-beloved person (please see Babylon 3, NYC, September 11, 2001).

The Formation of a Global Equity Market

After two years of extensive discussions, the New York Stock Exchange and nine other exchanges around the world last month announced their intention to create a 24-hour global equity market. The NYSE and the participating exchanges from three main time zones-Australia, Tokyo and Hong Kong in the Asia-Pacific; Sao Paulo, Mexico and Toronto in the Americas; and Euronext, the combined Amsterdam, Brussels and Paris exchanges, in Europe-plan to form a trading mechanism that would allow trading of the world's global companies to "follow the sun."

"We're laying the foundation for creating regional partner markets to the north, south, east and west," said NYSE Chairman and CEO Richard A. Grasso. "Each of the partnering markets will retain its brand and will form a platform to allow companies with worldwide demand to experience 24-hour trading of their shares." This, said Mr. Grasso, "will build better and easier access to best execution and price discovery on a global basis."

The proposed Global Equity Market would link the trading systems of each exchange to provide a global market structure based on the principles of transparency, self-regulation and agency-auction price discovery. This high-tech linkup of auction markets would create a global pool of liquidity, facilitate global price discovery and provide investors with better access to global stocks.

"The Global Equity Market would address investors' appetite for big-capitalized stocks by providing them easier access to blue chips not currently available on the Toronto Stock Exchange or the New York Stock Exchange," said Barbara Stymiest, president and CEO of the Toronto Stock Exchange.

The liquidity of the proposed Global Equity Market would be unmatched. The market capitalization of the companies listed on the participating exchanges exceeds $20 trillion, representing more than 60 percent of the world's market capitalization.

The globalization of business made the need for a global securities market obvious. "The initiative recognizes that the world is getting smaller and that neither a company's nor an investor's interests are confined within a national border," said Richard Humphry, managing director and CEO of the Australian Stock Exchange. "This is both a challenge and an opportunity, and one that ASX embraces."

In addition to meeting a clear market need, the 10-member alliance aims to achieve efficient, cost-effective post-trade processing through the clearing and settlement agencies associated with each exchange. "The creation of such a market is a natural development to meet the demands of investors for lower transaction costs and more efficient access to leading stocks in the most liquid international markets at any time of the day," said K.C. Kwong, chief executive of the Hong Kong Exchanges and Clearing Ltd.

The alliance will also help strengthen local equities markets. "This is the first initiative of its kind in terms of the quality and quantity of participants and represents new opportunities for the development of equities markets in Mexico," said Manuel Robleda, chairman and CEO of the Bolsa Mexicana de Valores, the Mexican Stock Exchange. Alfredo Rizkallah, chairman of the Bolsa de Valores de Sao Paulo, had similar comments: "The announced project will strengthen and integrate the Brazilian capital market with the major markets of the world."

The participating exchanges are enthusiastic, with several ready from a technical standpoint to come on board. "Euronext is ready to connect its state-of-the-art trading system with similar order-driven trading platforms located in other time zones," said Jean-François Théodore, chairman and CEO of Euronext.

The participants have scheduled a series of meetings and will make an announcement when further details of an agreement are reached. "The concept of a global equity market is an exciting new development, and the very fact that 10 stock exchanges from around the world have come together like this to discuss such a venture is in itself noteworthy," said Masaaki Tsuchida, president and CEO of the Tokyo Stock Exchange.

no date appears in article

Wednesday, June 7, 2000

NYSE, nine others to create global stock market

NEW YORK, June 7 (Reuters) - The New York Stock Exchange is leading a charge to set up global 24-hour-trading in equities with nine of the world's top bourses, all of them fearful not to lose out in the intense race to capture market share.

The plan crystalizes the contest for dominance of global equity trading into two camps led by familiar and long-time arch-rivals -- the NYSE, the world's biggest market, and the Nasdaq Stock Market.

The Toronto Stock Exchange, Canada's biggest, confirmed on Wednesday it was in talks with the New York Stock Exchange as well as markets in Japan, Australia, Hong Kong, Mexico, Brazil and Europe's Euronext alliance. The Tokyo Stock Exchange had announced the talks earlier in the day in Tokyo.

"What we are doing here is laying the foundation for a platform of trading across continents that will allow the world-class issuers, many of whom are not U.S.-based, to experience a follow-the-sun approach to the trading of their equities," NYSE Chairman Richard Grasso said at a news briefing at the Big Board's downtown Manhattan home.

The NYSE, at the close of its regular trading session at 4 p.m. EDT each day, is forced to sit on about one million unfilled orders, Grasso said.

"What we are envisioning is to make those orders available to other investors around the world," the NYSE chairman said.

Grasso estimated that about 400 global companies would meet the criteria to trade on the global platform. Of those, he estimated 50 percent would be based in the United States.

The ambitious project would create a global equity market, or GEM, in which the market capitalisation of listed companies would exceed $20 trillion. The new entity, in terms of market value, would control 60 percent of the world equity market.

The new GEM would be a powerful and direct competitor to the Nasdaq-backed iX, the planned merger of the London and Frankfurt exchanges, which faced fresh concerns Wednesday.

GEM would trade in big-name, international stocks by linking exchanges in three time zones -- Asia-Pacific, Europe-Middle East-Africa, plus North America and South America.

In addition to the NYSE, the plan is being put forward by the Tokyo Stock Exchange, the Australian Stock Exchange, and bourses in Paris, Brussels, Amsterdam, Toronto, Hong Kong, Mexico and Sao Paolo.

Euronext, the planned merger of bourses in Paris, Brussels and Amsterdam, said working groups were already in place to discuss round-the-clock trading in the 10-fold alliance.

"This is something that has been predicted and speculated upon for some time," said Lee Cook, head of European equities trading at J.P. Morgan & Co., one of the oldest U.S. banking companies.

"I am a little surprised by the participants," Cook said. "It's a big drawback that the LSE and Deutsche Bourse and Nasdaq aren't involved."

The big dealers would prefer one single global platform to avoid duplicating technology investment costs, and the emergence of two powerful rivals makes this more difficult to achieve.


Rapid advances in trading technology and a thirst for trading along sector rather than national lines is making global trading in the big liquid blue chips inevitable, but not easy.

"There are some real difficulties in doing so, both for regulatory and technology reasons," said Thomas Krantz, deputy secretary general of the International Federation of Stock Exchanges (FIBV), to which all the world's leading bourses belong.

"Don't look for a worldwide capital market tomorrow," Krantz added. "But just because the challenge is daunting, it does not mean that it's not worth trying to do some of it."

As with the iX plan to date, GEM's sketchy outline is likely to raise questions about the impact of differing exchange governance and listing rules and regulations, as well as conflicting tax and accounting laws.

Styles of trading also vary, with the NYSE using a floor while most are fully electronic. Some use central limit-order books, others don't.

Investors worry that GEM will simply accentuate focus on the bluest of the blue chips and leave the rest even further off the radar screen.

"For Brazil, for its companies, the plan is good -- big companies should be happy," said Roberto Dotta Filho, head of analysis and stock trading at Tudor Asset Management in Sao Paolo. "But for the market, it is pretty bad. All the money that could be circulating here will now go abroad."


Investment banks who already operate globally and generate most of the world's trading volumes welcomed the 10-bourse plan but were concerned that it would create a division in markets and leave the questions of clearing and settlement unanswered.

"There is a growing need to provide 24-hour, global coverage for our clients and any move toward that is positive," said J.P. Morgan's Cook.

Sadakazu Osaki, head of the capital market research department at Nomura Research Institute in Tokyo, described the plan as "epoch-making."

"This (plan) would eventually divide global stock exchanges into two powers -- one led by the iX, Nasdaq group and the other by Euronext, NYSE, TSE and others," Osaki added.

Toronto had joined the NYSE plan after ending discussions with Nasdaq about an alliance.

"The (Toronto exchange) has decided to pursue the GEM alliance because it offers benefits that best meet the interests of Canada, the (Toronto exchange), its customers and its shareholders," Barbara Stymiest, the exchange's president and chief executive said in a statement.

"GEM offers a global solution that is compatible with our market structure, technology, clearing and settlement protocol and regulatory environment," Stymiest said.

Seventy-seven Canadian companies are interlisted on the NYSE and Toronto.

Stymiest also said that talks that had been going on with Nasdaq on forming an alliance had been officially terminated.

In April, Nasdaq and the government of the Canadian province of Quebec unveiled plans to create a Montreal-based electronic exchange to be called Nasdaq Canada, a move that at the time seemed to outflank the Toronto exchange badly, analysts said.

The Canadian Nasdaq exchange, which is to begin operations in the third quarter of this year, will give Canadian companies better access to U.S. capital markets, Quebec officials said.

The new alliance will probably not compete directly with the new Nasdaq Canada, said Hubert Bolduc, press secretary for the province's department of finance.

"They're two different niches and I think for investors they provide access to two networks," he said.

Martin Korbmacher, co-head of global equities at Dresdner Kleinwort Benson, said making the GEM plan work would be tough.

"I'd actually be very surprised if we are really much further on than the stage where everybody is talking to everybody else," Korbmacher said. "It would be very difficult to do."

He said a key difficulty would be settlement of equity trades that have different cycles because of the three time zones involved.


The LSE said it was not holding any talks with the group of 10 exchanges as the London exchange focused on completing its merger with Frankfurt.

"There are no current plans to enter into agreements with anybody else at this time," an LSE spokesman said.

The iX merger is facing opposition from British retail brokers, who fear huge changeover costs.

Concerns about iX intensified Wednesday when Europe's biggest chemical company, BASF of Germany, said it and several other German blue chips were uneasy about the merger, complaining they had not been properly consulted in advance.

BASF and others worry that Frankfurt's DAX index could be scrapped, which could prompt investors to cut their holdings in German blue chips.

The Deutsche Boerse said German blue-chip concern was unjustified and the DAX index would remain as long as needed.

[Notice the date, 13 days after terrorist attacks.]


U.S. Segment Successfully Launched

U.S. equities, index funds and equity options launched simultaneously / Dutch segment as next step in Global Markets Concept to follow in the fourth quarter

Deutsche Börse and Eurex have successfully launched their new U.S. segment on Monday. In addition to the some 200 most-liquid U.S. stocks, two index funds are also being traded on Xetra. At the same time, Eurex, the derivatives exchange, initiated trading in 10 euro-denominated stock options on U.S. equities. Clearstream Banking is settling the trades. In a next step, Deutsche Börse wants to set up a Dutch segment.

In the U.S. segment, Xetra, Eurex and Clearstream Banking are combining their strengths and offering investors a complete line of U.S. products at the lowest possible costs. "By making this segment available, we want to become the leading platform in the European time zone for exchange trading in U.S. securities," said Volker Potthoff, member of the Executive Board of Deutsche Börse. The most important advantage for investors, he added, are the narrow spreads, which result in low trading costs. At the same time, as he went on to point out, these U.S. equities can now be traded continuously on Xetra.

Eurex CEO Rudolf Ferscha said: "By introducing the options on the most liquid U.S. stocks, we are further expanding our successful stock option segment. Equity-based derivatives offer great added value and have significant growth potential." As Ferscha put it, investors expect the leading derivatives exchange to offer them intelligent products for equity-based derivatives on American underlying instruments for their risk management.

The U.S. segment is the first building block in the Global Markets Concept, with which the partners Xetra, Eurex and Clearstream Banking want to further expand their international portfolio of products and services. As the next step within the framework of the Global Markets Concept, a segment for Dutch securities will follow in the fourth quarter. Deutsche Börse has enlisted the support of Van der Moolen and AOT Stock Specialist as Dutch Market Experts, who will provide binding quotes for all Dutch securities in the Dow Jones Euro STOXX 50. Eurex is already trading eight Dutch stock options.

With the launch of the new U.S. segment, Dow Jones Indexes, one of the leading global index providers, is incorporating the Xetra prices of the U.S. securities in its index calculation of the Dow Jones Industrial Average (DJIA) and Dow Jones Global Titans 50. The Dow Jones Industrial Average is thus now calculated and published on the basis of Xetra prices from 9:00 a.m. to 3:30 p.m. CET, before the markets open in the United States.

Five so-called US Market Experts make the market in the U.S. securities on Xetra and provide for liquidity by continuously quoting binding bid and ask prices at a minimum of 50,000 euros per quote. On Eurex, at least three market makers per stock option provide for liquidity. Eleven "Xetra US Partners" will pass the low Xetra trading fees on to their customers. Private investors can thus trade the U.S. securities at the same conditions as domestic blue chips. The smallest order size for private investors is one share. The Xetra US Partners manage a total of about 5 million private investor portfolios.

Private investors can view the entire order book in the U.S. securities on the Internet via the "Xetra Live" information screen. Every order can be followed in real time. The order book shows the 10 best bid and ask prices quoted in Xetra. The Xetra Live information screen is set up like the Xetra trading screens and is available free of charge until the end of the year at under Market Data/Xetra Live.

PRESS & NEWS | Press release list

17 July 2000

Outline of iX-international exchanges strategy and merger benefits; International group of key market users to advise board; Board members nominated.

London Stock Exchange and Deutsche Börse have today published the Information Documents which provide shareholders with details of the proposed merger to create iX-international exchanges.

The documents outline the goals and strategy of the new company, benefits of the merger for shareholders and customers, as well as the technology to be used. Shareholders will vote on the proposed merger on 14 September at extraordinary general meetings of the London Stock Exchange and Deutsche Börse.

Commenting, Don Cruickshank, chairman designate of iX-international exchanges, said: "The critical mass and significant synergies created by this merger will bring lower dealing costs, better prices and unprecedented access to a wide range of international investment opportunities and markets. iX-international exchanges will be Europe's largest equities market and the world's leading derivatives exchange, with the financial strength to develop a substantial information and e-commerce business.

"We believe that iX-international exchanges will provide benefits to all market users and the board firmly recommends this merger to our shareholders."

Werner Seifert, chief executive-designate of iX-international exchanges, said: "Bringing together the two leading stock exchanges in Europe is an important step in enhancing the efficiency of European capital markets. Both boards believe that it will benefit investors, issuers, intermediaries and thus shareholders."

Goals and strategy

London Stock Exchange and Deutsche Börse intend that iX-international exchanges should become the leading global exchange organisation, providing services at lowest costs and creating significant benefits for its customers and value for its shareholders. iX-international exchanges will offer a broad range of services, including trading and information products for equities and derivatives, exchange systems technology and new e-commerce initiatives.


Before making substantial changes to market structures or services, iX-international exchanges will seek input from a broad range of market users, including private client brokers, dealers, investors and issuers. iX-international exchanges will establish a new Senior Market Advisory Group to provide practitioner input to the board.


Benefits for both customers and shareholders will result from the critical mass that will be created by combining markets and by the economic effects of creating a single electronic trading platform and rationalised infrastructure.

- Private client brokers and other intermediaries will benefit from the lower charges derived from economies of scale, as well as easier access to a broad range of products and services. iX-international exchanges will support initiatives to link the single electronic trading system to one central counterparty.

- Investors will benefit from lower transaction and dealing costs as a result of cost synergies primarily achieved in the areas of technology and systems. Increased liquidity is expected to lead to narrower bid-offer spreads and thus more competitive pricing.

- Companies will benefit from the concentration of investor focus and access to a deeper pool of capital.

- Shareholders are expected to benefit from operating cost synergies of approximately £50 million per annum from the year commencing 1 January 2002. iX-international exchanges will be managed with the objective of maximising shareholder value.


In addition to its existing markets, iX-international exchanges will develop a pan-European blue-chip market under the UK regulatory regime and a pan-European high-growth market under the German regulatory regime. Companies will be able to use their home country listing when admitted to trading on iX-international exchanges' new markets.


Existing indices such as the FTSE 100 or DAX will continue to exist. While they are defined by the country of their constituents, iX -international exchanges intends to ensure the market has a single pan-European index family, as well as derivative products based on these indices.


The Merger Partners' ultimate aim is to form a long-term, substantive relationship on a global basis with Nasdaq. Work is currently in hand on a joint venture agreement to provide an intermediate step towards achieving the shared global vision. The parties also intend to take substantial cross-shareholdings in each other and will work together thereafter to explore a full merger of interests to create a global exchange.

Milan and Madrid

The stock exchanges of Milan and Madrid have indicated that they will negotiate with iX-international exchanges to become part of the group following the merger.


Technology for iX-international exchanges will be provided by Deutsche Börse's existing IT subsidiary Deutsche Börse Systems. iX-international exchanges is committed to the development of an upgraded trading platform, based on Xetra technology, which will accommodate the functionality of all iX-international exchanges' markets on one platform. The migration of all trading to this platform should be completed by December 2001.

To reduce the impact on customers of the migration to the unified trading platform, iX-international exchanges will offer extensive assistance to its customers including, for example, the provision of optional 'starter kits'. iX-international exchanges will set aside a sum of £8 million to be used to make a cash payment of approximately £30,000 to each existing customer of the London Stock Exchange's trading services as a contribution to the cost of migrating from the existing infrastructure.


The board of iX-international exchanges will initially comprise the chairman, deputy chairman, chief executive, two executive and five additional non-executive directors. The London Stock Exchange and Deutsche Börse have each initially nominated five directors onto the board. In addition, the merger partners have agreed that two further non-executive directors, independent of both the London Stock Exchange and Deutsche Börse, will be appointed in due course.

The board will consist of:

Don Cruickshank (chairman); Rolf-E. Breuer (non-executive deputy chairman); Werner Seifert (chief executive); Martin Wheatley (deputy to chief executive); Jonathan Howell (finance director). Non-executive directors: Uwe E. Flach; Michael Marks; Friedrich von Metzler; Ian Salter; Manfred Zass.


Over the next few weeks there will be a series of visits with shareholders and customers of the London Stock Exchange and Deutsche Börse.

Extraordinary General Meetings will be held on 14 September in London and Frankfurt at which shareholders will vote on the merger proposal.

For shareholders in the London Stock Exchange, an off-market matched bargain dealing facility in the Exchange's shares will be offered by Cazenove & Co from 24 July 2000.


Note to editors: Details of this merger, which is subject to shareholder and regulatory approvals, are contained in the Information Documents. The above is a summary of the documents, which can be accessed on the websites of the two exchanges:

European bourses seek Nasdaq merger
By Vincent Boland, Capital Markets Editor
Published: July 17 2000 10:57 | Last Updated: July 18 2000 09:44

The London Stock Exchange and Deutsche Börse said on Monday they would seek an eventual merger with Nasdaq of the US as they seek to build a global stock exchange business in the wake of their proposed merger.

In a letter to shareholders released on Monday, the two exchanges said iX, the name for their proposed Anglo/German stock exchange, and Nasdaq would take substantial cross-shareholdings in each other and would "work together thereafter to explore a full merger of interests to create a global exchange".

The LSE and Deutsche Börse unveiled a merger of their markets in May to form iX, as well as a joint venture with Nasdaq to build a pan-European market for growth and technology stocks.

The letter said iX would develop a pan-European blue chip market under the UK regulatory regime and a pan-European high growth market under the German regulatory regime. Companies would be able to use their home country listing when admitted to trading on iX.

There has been criticism of the plan to have separate regulatory jurisdiction of the constituent markets of iX. But Don Cruickshank, chairman-designate of the new exchange and chairman of the LSE, said: "We believe that iX-international exchanges will provide benefits to all market users and the board firmly recommends this merger to our shareholders."

As well as Mr Cruickshank's position as chairman-designate, the iX board was also finalised. Werner Seifert was confirmed as chief executive, while Martin Wheatley and Jonathan Howell, senior executives at the LSE, were named as deputy to the CEO and finance director respectively.


Verhofstadt: replace G8 with regional blocks group

Guy Verhofstadt, Prime minister of Belgium and current President-in-office of the European Union, proposes that the G8 group of the rich countries be replaced by a new G8 of existing regional partnerships, in order to create a political body representing the globalised market, to correct globalisation inequities. In an open letter called "The paradox of Anti-globalisation," the Belgian Prime Minister challenges anti-globalisation movements, saying that the answer to globalisation problems is more globalisation.

"You are asking the right questions," he said. "But do you have the right answers? Nobody now denies the existence of climate change and global warming. But such issues can only be dealt with through global commitments. Everybody recognises the importance of free world trade for the poorest countries. But this also requires global social and ecological standards." He also says that that was exactly the point of James Tobin, who proposed the introduction of a tax on international capital movements, and that is essentially the paradox of anti-globalisation: globalisation can serve the cause of good as much as it can serve the cause of evil."

For Mr Verfofstadt, the challenge we face today is not so much how to stop globalisation but how to give it an ethical foundation. He defines ethical gobalisation as "a triangle consisting of free trade, knowledge and democracy; alternatively, trade, aid and conflict prevention."

Guy Verhofstadt also calls for a powerful instrument to enforce ethical globalisation: the G8 of global partnerships, which would give the South its deserved place at the negotiations table, to ensure that the economy is led in the right direction. The new G8 would thus be a forum where the leading continental partnerships are all represented on an equal footing: the European Union, the African Union, Mercosur, ASEAN, the North American Free Trade Agreement. In his view, the new G8 would produce binding agreements on global ethical standards, on working conditions, intellectual property and good governance, and would issue guidelines for the functioning of the World Trade Orgaisation, or World Bank or the Kyoto Agreement.

The proposal put forward by the Belgian Prime Minister is a personal one and will be discussed on 30 October in the auditorium of the University of Ghent, Belgium. e_id=3610

See also:
Mark of the Beast
Ten Crowns/Horns/Kings


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