Established by the Royal Decree of June 10, 1996, the EASDAQ Stock Market is operating as a screen-based pan-European stock market focusing on high growth companies.

Although established under Belgian law, EASDAQ nevertheless aims to be pan-European, operating independent of other European stock markets. This pan-European nature is mainly reflected in its membership structure, which is based on the European passport.

For Belgium, members are investment firms (stockbrokers and portfolio management companies), as defined in the Investment Services Directive, and credit institutions, as defined in the Second Banking Directive.

Members can be active on the market in one of the following capacities : as broker, market maker or sponsor.

ORGANIZATION OF THE MARKET

The market is governed by EASDAQ S.A., a commercial company recognized by the Royal Decree of July 6, 1996. No restrictions whatsoever exist on becoming a shareholder of EASDAQ S.A., EASDAQ being closely tailored after NASDAQ (which is a minority shareholder of EASDAQ).

The powers of EASDAQ S.A. are divided amongst several corporate bodies, being the shareholders' meeting, the board of directors, the management committee and the market authority. Apart from this structure, there will be an international commission of appeals which will have the role of an appellate body regarding certain decisions of the market authority.

The board of directors determines the general policy of EASDAQ S.A. and drafts up the EASDAQ regulations. The management committee is in charge of the daily management of EASDAQ S.A. for any matters which do not fall within the powers of the market authority. The market authority is entrusted with the daily operation and supervision of the market. It operates as an independent body within EASDAQ. Consisting of four members, appointed by the board of directors subject to the Belgian Minister of Finance's approval, the market authority draws up the market regulations, containing the rules of business conduct, and is - amongst other things - responsible for the individual decisions regarding admission to the market, membership and disciplinary sanctions. Appeals against its decisions can be launched with the international commission of appeals, an ad hoc body set up to hear appeals regarding certain decisions of the market authorities of the Belgian financial markets.

Whereas the market authority is in charge of the first-line control, the second-line control rests with the Banking and Finance Commission ("BFC"). It supervises in particular the administrative organization of the market authority, the setting up by the market authority of the necessary procedures, etc.

ADMISSION TO EASDAQ

A company wishing to be admitted to trade on EASDAQ must find, among the EASDAQ members, a sponsor as well as two market makers willing to trade in its securities. These are ongoing obligations. The sponsor can also be a market maker. Market makers compete for investment orders by entering prices at which they are willing to buy and sell securities in the TRAX-system.

In order to be admitted to trade on EASDAQ, companies must also publish a prospectus which has been approved by an EU competent authority (in Belgium, the Banking and Finance Commission).

Conditions of admission can be divided into quantitative and qualitative conditions. Quantitative conditions include minimum level of total assets, capital and reserves, both at the time of admission and on an ongoing basis. Qualitative conditions are such items as good standing and adequacy of the financial information of the company.

These conditions are ensured by the requirements with respect to information disclosure and corporate governance. On an ongoing basis, specific periodic and occasional information requirements apply. Periodic information requirements include annual reports, which must contain the financial statements.

INFORMATION TECHNOLOGY

EASDAQ is an on-screen market. Trading occurs via telephone, and must be confirmed within three minutes via an entry on the TRAX-system. This TRAX-system looks for corresponding entries and matches them to confirm the trade. EASDAQ has appointed INTERSETTLE to provide the settlement system, by linking it to TRAX via a direct communication line.

The information technology on which EASDAQ is based is very similar to the existing software now in place with brokers. It runs on Windows NT. Brokers therefore should not have substantial problems installing this new software.

The content of this article is intended to provide general information on the subject matter. It is not a substitute for specialist advice.

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