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Frankfurt OKs London link
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May 24, 2000: 4:13 a.m. ET
Board votes in favor of exchange merger, although hurdles remain
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LONDON (CNNfn) - Plans for a European "superbourse" received a boost late Tuesday, when the board of the German stock exchange formally approved its intention to merge with its London counterpart.
Deutsche Boerse's 21-member board discussed the merger for several hours Tuesday, and eventually 17 directors voted in favor of the deal, with only four members abstaining. The vote provided a huge vote of confidence in the strategy pursued by the exchange's energetic chief executive, Werner Seifert.
Benn Steil of New York's Council on Foreign Relations, and an expert on European stock exchanges, told Reuters. "It's one significant step, but there are still a lot of hurdles to overcome."
A combination of London and Frankfurt would create the world's third-largest exchange, trading stocks worth some $4.3 trillion. The new exchange is to be called iX.
Politicians and business leaders in Britain and Germany have voiced opposition to the tie between Europe's largest stock markets. Several members of the Deutsche Boerse executive had also made their doubts public.
European stock exchanges have been moving toward consolidation recently, with the Frankfurt/London alliance competing with a recently announced plan to merge the exchanges of Paris, Brussels and Amsterdam.
Although formal approval in Germany is a step forward, the merger still faces significant obstacles. Michael Portillo, finance spokesman for the UK opposition Conservative party, told CNNfn he still has reservations about several aspects of the merger, particularly the decision to trade growth stocks in Frankfurt, and the issue of which currency the stocks will trade in.
The plan is for high-value companies to trade in London, with technology and growth shares being bought and sold in Frankfurt. Politicians in Hesse, regulators of the Frankfurt exchange, have also expressed concern that all trading may eventually move to London.
London Stock Exchange shareholders still must vote on the deal, and that is not expected until the autumn. 
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