Battle to become Europe's answer to Nasdaq hots up

Competition is intensifying between Easdaq and the Euro.NM alliance in the drive to create a European version of Nasdaq, the US market for growing companies.

Last week Euro.NM, which groups the growth-company stock markets of France, Germany, Belgium and the Netherlands, was celebrating a notable coup persuading a company already listed on Easdaq to take a second listing on the Nouveau Marche, the alliance's French member market.

Chemunex, the company involved, said it wanted a Paris listing to improve liquidity of its shares and to tap the French retail market. That raises the question of why Easdaq was allegedly unable to provide such investors and liquidity, but the Brussels-based exchange remains a specialised market with a dedicated institutional following.

Now Easdaq is fighting back. It has just unveiled five new listings, mainly in the biotechnology and high-technology sectors, from Austria, Switzerland, the Netherlands, the US and the UK, which will float in the next few weeks. That will bring the total number of listings on the market to 32, and more are expected by the end of the summer.

From July 1st, it will launch a new index, the EASI all-share index, to provide a benchmark for portfolio investment.

This coincides with the launch of investment funds dedicated solely to Easdaq-listed companies. A tracker fund is also about to be launched.

The 18-month-old exchange has complained to the European Commission over recent legislation in France and Italy offering tax incentives to companies from those countries if they list on national exchanges. "These tax concessions are exclusive to those countries and are effectively subsidies. We believe they should apply to all stock markets or be removed," says Stanislas Yassukovich, Easdaq's chairman.

The European Union is increasingly sympathetic to the exchange's arguments on the need for greater access to risk capital and the harmonisation of listing requirements across Europe. That should encourage more cross-border participation in the market, but local regulatory bodies are naturally reluctant to give up their powers, Mr Yassukovich says.

Germany and the UK have nevertheless shown signs they are aware of the need to harmonise regulation, and he believes others will follow.

However, Easdaq remains behind the Euro.NM alliance in the number of listings and market capitalisation.

Euro.NM has just celebrated its 101st listing and boasts a market capitalisation of more than $20bn.

Easdaq is capitalised at $13bn although its companies tend to be bigger than those on the national markets, they face much tougher listing and disclosure requirements, and the exchange has a fast-track trading link with Nasdaq, all of which appeal to institutional investors.

But in choosing whether to list on Easdaq or become a Euro.NM member, nationality still plays a role, if the experience of Global Graphics, a French graphic arts company which made its Easdaq debut this week, is a guide. It illustrates the barriers ahead to those who argue for a single European stock market to complement a single European currency.

Johan Volckaerts, the Belgian chief executive of Global Graphics, says he chose Easdaq last year, at a time when the Nouveau Marche in Paris was struggling to assert its presence, but met with intense pressure from the Paris stock exchange to secure the listing.

"There was a tremendous amount of lobbying by the Nouveau Marche and the Paris bourse," he says.

"The Nouveau Marche is a quantity contest, not a quality contest," Mr Volckaerts adds. "Easdaq was able to offer me strong Belgian market exposure because Belgians buy a lot of shares; a good portfolio of high-tech companies; and immediate access to Nasdaq if I want it. Any dual listing for Global Graphics would be on Nasdaq."

Still, no stock market likes to share a company with another, and Easdaq will be keen to avoid too many cases like that of Chemunex.

It needs to develop a European retail market to rival Nasdaq's following in the US, which will prove difficult as long as ordinary investors are reluctant to consider

or are not offered the opportunity to participate in cross-border initial public offerings.

"The absence of a retail market is not so much a weakness of Easdaq as of Europe," Mr Yassukovich says.

"There is work in progress to increase our penetration of the retail market, but our primary duty has been to our institutional clients."