The London Stock Exchange might be willing to countenance merger discussions once again with Deutsche Börse, but it is not content to stand idly by while the Swiss Exchange (SWX) tries to poach its lucrative Eurobond business.
As of the beginning of this year, EU issuers have had to report under International Financial Reporting Standards. The EU prospectus directive, to be introduced in July, will mean that those issuing in the EU will have to produce annual reports and greatly enhance disclosure. The rule is designed to protect retail investors ? bonds with a face value of more than e50,000 are excluded from compliance to avoid adversely affecting the institutional market. But many market players say this is an artificial distinction. Some institutions issue bonds for less than e50,000 and no convertible bonds of any value at all are exempted under the prospectus directive.
SWX announced new listing rules last November that will make it possible to issue bonds under foreign law and list them outside the EU in Switzerland, as of the beginning of next month, to avoid these new restrictions. The aim was to help Switzerland take more business away from the two centres where most Eurobonds are listed, Luxembourg and London.