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German exchanges combine services

John Eisenhammer
Wednesday 07 October 1992 23:02 BST
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GERMANY'S stock exchanges yesterday announced an agreement to centralise and streamline some of their services, regarded as a key step towards strengthening competitiveness on international financial markets.

The agreement, which has been in the making for the past three years, is also intended to boost Frankfurt's position as a rival to New York, Tokyo and London.

According to the plan, Germany's seven other regional stock exchanges will retain their independence but will also become shareholders in a new, centralised holding company, Deutsche Borse AG, which will be set up on the Frankfurt Stock Exchange. The other regional exchanges will be given four seats on an enlarged supervisory board.

Brokers are counting on the changes to reduce bureaucracy and the costs of dealing in the equity markets, which have put German exchanges at a disadvantage in relation to London. The negotiations have dragged on because of resistance by the regional exchanges, which fear a loss of influence. The new mechanism is due to come into effect next January.

Deutsche Borse will take over two other operations, the German options and futures exchanges, and an independent organisation that handles securities settlements. These changes will later be bolstered by further reforms designed to improve Frankfurt's international performance, such as anti-insider dealing regulations, the creation of a supervisory body for the securities industry, and new disclosure rules on equities.

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