A new stock exchange, situated in Brussels, will launch activities in Europe at the end of November. EASDAQ exchange market activity is modeled after the NASDAQ market in the US.
Jacques Putzeys, CEO of the new exchange, in Israel for a visit, stated the exchange does not intend to compete with the NASDAQ, but complement it, providing European and Israeli growth companies the opportunity to list for trade outside of their own countries.
EASDAQ trade will be completely computerized, similar to NASDAQ trading methods, and information on the shares, including buy and sell orders, will be published on vendor networks such as Bloomberg and Reuters. Trade will be conducted by market makers, as is done on the NASDAQ.
The European Venture Capital Association came up with the EASDAQ idea in response to a shortage of equity finance for growth companies.
Three Israeli concerns hold shares in the EASDAQ corporation, Bank Leumi, Evergreen and Shirat Enterprise. Among well-known shareholders in the exchange number Furman Selz, Montgomery, Hambrecht and Quist and others. The NASDAQ itself is also invested in the new exchange, as well as acting as a consultant for the exchange’s managers. Some EASDAQ shareholders are interested in being active also as brokers and market makers.
Like NASDAQ, EASDAQ earmarks itself for companies able to present growth in the next few years, primarily with high tech-oriented dispositions.
Putzeys noted the methods of trading and requirements on listed companies were intentionally drafted along the lines of NASDAQ requirements, in order to make it possible for companies to list themselves on both exchanges.
Putzeys projects six or seven companies will issue by the end of the year, raising $100-250 million.
Only 80 companies are currently traded on the NASDAQ. Putzeys attributes this to difficulties European companies have in meeting the US Securities and Exchange Commission’s (SEC) stringent requirements, which are based on different principles than the conventional European ones.
In addition, the US stock exchange "culture" requires a great deal of managerial resources, requiring managers to be in the vicinity of the US investors. This distances the managers from the companies and taxes their ability to do the job.
Putzeys said European banking institutions emphasized the dearth of "European products" among the securities they offer their customers. This motivated them to be among the primary forces behind the establishment of the EASDAQ, and many of them are also shareholders in the exchange.
EASDAQ founders emphasize the pan-European nature of the exchange, which will list companies from may countries. Hopefully, the accounting standardization will also be one more step on the journey to a single securities authority in Europe, like the SEC.
"If fifty companies trade on the EASDAQ by the end of 1997, we will see it as a success," Putzeys concluded.