Cross-Listed Equities Arrive


The Deutsche Boerse and Eurex announced plans to cross-list 200 of the most liquid U.S. equities and derivatives. Trading is scheduled to begin in September on the Xetra platform.

The historic launch is the first stage in the Boerse's Global Market Concept, and aims to establish its position as the preeminent global trading platform in Europe. The erstwhile German exchange will not be without competition. Euronext announced the cross-listing of a full range of exchange-traded funds with AMEX that is scheduled to occur later this year, pending regulatory approval. Similar arrangements have already been realized on the Singapore and Hong Kong exchanges.

Long pursued, but until now unrealized, it appears that global trading has gained a foothold. The wave of exchange mergers and cross-listing activity is likely only the beginning.

Included in the "Xetra US Stars" group will be the 30 stocks of the Dow Jones Industrial Average (DJIA), the Dow Jones Global Titans, the Nasdaq 100, and the S&P 100. The equities and options will be priced in euros. Trades will be settled within Clearstream Banking via the Depository Clearing and Trust Corporation (DTCC) in the United States. Goldman Sachs and Merrill Lynch will make markets and provide liquidity on the Deutsche Boerse.

Under the new arrangement, Dow Jones will begin calculating the DJIA based on Xetra prices when the U.S. market is closed. Dow Jones also noted that the process is underway to facilitate the development of products such as ETFs based on the relevant indexes, which will be cross-listed and trade around the clock.

David Moran, president of Dow Jones Indexes said, "We congratulate Deutsche Boerse for taking this step towards facilitating a global market. This will make the Dow Jones Industrial Average the first country index ever to be calculated with price sources outside of its time zone."