Young, innovative companies with high growth potential require stock markets geared to their specific needs - markets which are easily accessible, where equity finance is readily available, and which attract international as well as domestic investor interest. Such markets must be efficient and well-regulated, providing investor confidence through demonstrable fairness and transparency, and should be structured to maximised liquidity for both institutional and retail investors.
Created on 1st March 1996 to meet these objectives, EURO.NM is a pan-European network of regulated markets dedicated to growth companies, regardless of their sector of activity or home country. The members of EURO.NM and their respective growth markets currently include the Paris Stock Exchange (Le Nouveau Marche), Deutsche Borse AG (Neuer Markt), Amsterdam Exchanges (NMAX) and the Brussels Stock Exchange (EURO.NM Belgium). With admission and other criteria modelled on Nasdaq, expansion of the EURO.NM network is foreseen as other exchanges launch similar markets.
Key to EURO.NM's philosophy is the belief that, in a European context, maximising accessibility and opportunity for all market participants is best achieved by linking the experience, resources and networks of existing national markets. This decentralised, multi-local approach offers significant advantages compared to a centralised, supranational structure by building on solid domestic foundations across multiple European financial centres.
EURO.NM's objective is to develop a fully-integrated, pan-European network of high-growth stock markets, providing single points of access for market information and trading across the entire network. To create this single market network, four main areas of co-operation have been agreed between EURO.NM's member markets and are at varying stages of implementation.
Market Harmonisation
Essential to the integrity of EURO.NM is the adoption of convergent regulatory and operational standards between its member states. A formal Markets Harmonisation Agreement was signed in December 1996 setting out minimum common standards to be adopted in the areas of listing requirements, membership criteria, trading procedures and disclosure requirements. It is anticipated that these standards will be tightened according to initial market experience, with further convergence expected by the end of 1997. These standards must also be adopted by any new entrants to the EURO.NM network.
Cross Membership
EURO.NM will provide cross-membership between its markets, giving member firms of any one market the ability to trade all EURO.NM stocks listed throughout the network. Member firms of each market will therefore effectively become members of EURO.NM overall.
Market Linkage
Providing the technical framework to underpin cross-membership, EURO.NM markets will link their existing systems to form a common electronic structure for market information and trading. Initially, this will allow the creation and distribution of a common data feed carrying real-time data from all four markets, and the introduction of an official EURO.NM index. Hand-in-hand with cross-membership, linkage of trading systems will follow on a phased basis, with Paris and Brussels expected to connect before the end of 1997, joined by Amsterdam and Frankfurt in 1998.
Joint Promotion
The continued development of common promotion and investor relations programmes will provide increased visibility for EURO.NM's member markets, listed companies and intermediaries with the international investment community, as well as with prospective issuers. Planned activities include regular roadshows, the distribution of consolidated statistics and company information, and the enhancement of EURO.NM's website.
The benefit to this approach are numerous. Companies will have the combined advantages of being able to seek a listing and be regulated in their own domestic environment, build a strong domestic investor base, and at the same time achieve visibility with a broad range of international investors. Investors world-wide will have access to a critical mass of innovative growth companies with a consistent quality level, and through a common datafeed will be able to monitor any listed company on the EURO.NM network. Intermediaries will also benefit from this critical mass and increased investor interest, since this will be likely to attract a larger number of listing candidates to the primary market and will enhance liquidity of the issuers' secondary markets across all EURO.NM exchanges.
Whilst EURO.NM's main purpose is to provide European growth companies with the ability to raise capital and gain access to a large pool of international investors, Europe's geographical boundaries are not a limiting factor. Full support will be given to those EURO.NM companies wishing to seek secondary listings in other markets, for example on Nasdaq. Equally, North American, Israeli or other growth companies wishing to raise new capital and enhance their visibility with investors in Europe will find EURO.NM the natural market on which to achieve these objectives.
EURO.NM's combined advantages of early critical mass, good liquidity and strong performance are expected to attract a growing number of companies, investors and intermediaries - with over 70 listings anticipated by the end of 1997, and over 500 within five years.
EURO.NM has made a promising start, with all four markets successfully launched, and is on track to meet its original commitment to integrate its markets into a single pan-European network.
The objective of becoming the leading market for high-growth stocks within the European time zone is well on the way to being realised.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information please contact Thom Hoedemakers, Amsterdam Exchanges AEX Amsterdam: 00 31 20 550 4540 or Paddy Manning, St James Corporate Communications London: 44 171 436 4101.
