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East: Vienna Plans Regional Stock Market For Eastern Europe

By Michael Leidig

Vienna, 10 April 1998 (RFE/RL) -- The Vienna stock exchange has launched plans to secure its position as the principle marketplace for Central and Eastern Europe.

In cooperation with Deutsche Borse AG, the Vienna exchange's holding company, Wiener Borse AG, has established an exchange for Central and Eastern Europe in Vienna. The Eastern European Stock Exchange, which will be jointly owned by Deutsche Borse and Wiener Borse, will initially build on the 80 Eastern European companies currently listed on the Frankfurt exchange.

The new exchange aims to consolidate liquidity by creating a transparent market for Eastern Europe. According to Wiener Borse, the cooperation will present advantages to both investors and issuers. Company shares will be traded on an international platform, which improves opportunities for raising capital, while, at the same time, lowering capital costs. For investors, the larger number of participants resulting from cross-membership should increase liquidity substantially.

Wiener Borse is hoping to capitalize on the substantial growth seen in the emerging markets in Eastern Europe over the last decade. Last year, cross-border capital into Eastern European markets more than doubled to $9.5 billion from $4 billion, and turnover volume is expected to increase further in 1998.

Wiener Borse has said that it hopes the new Eastern Europe exchange will secure the long-term future for Vienna as a financial marketplace. Market analysts have predicted that European Monetary Union would probably lead to the shutdown of the smaller European exchanges, with most of the trading centered in Paris or Frankfurt.

Stock traders in several countries, including the Czech Republic, have expressed concerned that the Vienna market could significantly diminish the prestige and influence of their recently re-established stock exchanges.

The Vienna exchange is aiming to secure a niche market that would take advantage of Austria's proximity to emerging Eastern markets and its historically strong relationships with many of the former East Bloc countries.

The new plans signal the Vienna exchange's first step into the Eastern European cash market. The futures and options exchange (OTOB) already offers indices for Czech, Hungarian, Polish and Russian futures and options.

In the first partnership between a Western and Eastern exchange, Wiener Borse has signed a cooperation agreement with RM-System Prague (RMS). An electronic trading system, RMS is currently used for over one-third of the trading volume in the Czech Republic. RMS will start first with trading in futures and options on the Vienna futures and option's exchange's Czech Traded Index (CTX), and the remainder of the CECE products will be switched to RMS later this year.