European Stock Markets and Recent Developments

By : Suchaya Hongstong

Topics• The overview of the

European stock markets

• Structure and organization of the European stock markets

• Major European stock exchange markets and their operations

• Recent developments

European Stock Market• The UK stock financial system played an important roles during

the nineteenth century

• Before 1995, the European stock markets operated by being isolation and barriers to capital mobility

• A reform with advances in computer and telecommunication in mid 1980.

• London Stock Exchange (LSE) is the largest European market in term of total market capitalization, listed companies, and volume of trading.

• The market value of LSE domestic firms is less than half the size of Tokyo Stock Exchange and only 15% the size of New York Stock Exchange.

Organizations and Structures of Major European stock market

Three distinguishable types of organization - Privately owned and self regulated market- State controlled market- Semi-independent market

United Kingdom• Financial institutions in London

has provided service to international clients around the world since 1979

• In 1993, the Irish Stock Exchange was merged with other British and Irish stock exchange creating the International Stock Exchange of Great Britain and Ireland

• In 1995, Dublin Stock Exchange separated from the UK exchange to be an independent Irish Stock Exchange

• FTSE 100 (Footsie): Index of 100 largest companies listed on the London Stock Exchange

Germany• Foreign stocks were first

introduced in 1950s.

• The Frankfurt Stock Exchange (FSE), the Germany’s largest and the most important stock market, is operate by Deutsche Borse AG

• There are other seven stock

markets in Berlin, Hamburg, Hanover, Düsseldorf, Munich, Bremen and Stuttgart

• 70% of the equities are the foreign equities. And 80% are foreign bonds

Major Stock Market Operations and Activities

London Stock Exchange (LSE)

• Started in the 17th Century as London coffee houses and became the city most important financial institution.

London Stock Exchange (LSE)• LSE became the world’s

– global exchange business– equities exchange– pool of capital links to Asia and Africa

• A series of reforms called “Big Bang” in 1986

• Stock Exchange Automated Quotation (SEAQ)

• Alternative Investment Market (AIM) for small companies in 1995

• Two primary markets– Main Market– AIM

Deutsche BÖrse (FWB)

• Offers a wide range of services and system applications enabling shares and derivatives to be traded under one roof

• FWB introduced an electronic trading system called the Exchange Electronic Trading (XETRA) in 1997

Euronext

• Established in 2000 by a merger of Amsterdam, Bressels and Paris exchanges

• Offer financial instruments, trading in securities and derivatives

Recent Developments in European Stock Markets

• Accelerating integration and globalization through the deregulation and development of technology

• Euro currency has been launched on 1 Jan 1999 with 11 countries

• Alliance with U.S stock markets

• Pan-European exchanges offers standardization of trading platforms

• The Deutsche Borse Frankfurt has merged with LSE to create the new entity called International Exchange (iX)

Thank you