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OM HEX mulls index products

01 July 2003

The merger between Sweden's OM and the Finnish market HEX could pave the way for a range of new index products, according to OM founder and chairman of the board Olof Stenhammar.

The exchange is considering introducing new index derivatives for forestry and telecommunication stocks, but would like to get the merger out of the way first.  "We can look at sector products," Stenhammar explains. "The telecom sector is a major sector with Nokia and Ericsson. Forestry products might also be considered. Both industry sectors are strong players in both countries, we will see what happens? That's what we will be looking into, but, first of all, we want to get the merger in place."

HEX's agreement with Eurex, which lists Finnish derivatives, will continue unaltered, as would derivatives trading on the Stockholm stock exchange.

"Derivatives trading isn't going to be affected at all," Stenhammar says. "We anticipate the trading on Eurex will continue as before? We will of course take up talks with Eurex, and see how we can co-operate in future? The Eurex agreement is in place and will continue. It's rather profitable." However, he ruled out any plans for Swedish derivatives to be switched to Eurex.

The creation of OM HEX will create an integrated Nordic and Baltic market for the listing, trading, clearing, settlement and depository of securities. Its operations will be based on two divisions: HEX Integrated Markets - northern Europe's largest securities market, with access to 80% of the Nordic equity market - and OM Technology, a leading provider of transaction technology to international financial and energy markets.

The merger also includes Estonia and Latvia, where HEX owns and operates the exchanges and central securities depositories (CSDs).  OM HEX plans to invite other Nordic and Baltic exchanges, clearing houses and CSDs to either merge with it or expand existing co-operations.  While Oslo and Copenhagen have already sounded a welcome to closer integration, they say any merger with them is some way in the future. All the Nordic exchanges, except Finland, participate in the Norex bourse alliance.

Going forward, the plan is to implement OM Technology's trading and CSD platforms at HEX. OM is offering HEX's shareholders 2.5 newly issued shares in OM for each HEX share, plus an extra dividend of Skr272m. The overall price is estimated at Skr2.1 billion. OM holds 15.6% of HEX already, but would end up with 71% of the new company.

Per Larsson has relinquished his position as ceo of OM, receiving a Skr11.2m severance package and Skr3m bonus. While Stenhammar is likely to become OM HEX chairman, Magnus Böcker has been appointed acting ceo until a new one is found to head the merged entity.


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