BUSINESSWEEK ONLINE : JANUARY 15, 2001 ISSUE
INTERNATIONAL -- FINANCE A Common Market, but Not for Equities (int'l edition) The European Union is a single market, right? Well, not for stocks. The EU has more than 30 regulators and 20 stock exchanges. Many large companies release earnings only twice a year in Germany--but Britain requires quarterly reports. Insider trading prohibitions are stricter in Britain than in Germany. If a French company bids for one listed in Britain, British rules apply. If a British company bids, French rules prevail. Such inconsistency isn't just inconvenient. It also unnerves individual investors and frustrates institutions. Europe's financial players want a common regulator like the U.S. Securities & Exchange Commission. They also want a single code covering listings, disclosure, trading, and takeovers. In July, Europe's finance ministers named seven ''Wise Men''--central bankers, market veterans, and businessmen--to examine the question. The group, led by Alexandre Lamfalussy, the 71-year-old former president of the European Monetary Institute, published its initial report on Nov. 9. Final proposals are due in February. The preliminary finding: Europe won't get a single policeman soon. ''I don't exclude a European SEC later on, but this is not the time to raise the question,'' Lamfalussy says. Right now, Europe's legislative process is excruciating. First, the European Commission proposes a law, then the European Parliament and European Council approve them. It takes 3 1/2 years on average for proposals to wend their way through various government bodies. It took 10 years before legislation on European cross-border takeovers finally came before the European Parliament last December. There critics of the bill tacked on amendments letting companies adopt poison pills without consulting shareholders. The statute now returns to the European Commission and European Council for further consideration. Creating a European SEC would require changing the treaty governing the EU. That would take at least four years, once the parties agree on the rules it should enforce. Lamfalussy proposes to streamline the procedures by limiting proposals to basic principles, putting strict time limits on the process. A law on, say, insider trading would lay out broad principles, then each EU member state would draft its own implementing regulations. Lamfalussy, an architect of European monetary union, says: ''My present work is less politically spectacular than launching the single currency. But intellectually it's a tougher job.'' Meanwhile, markets are pushing the bureaucrats to find other ways around the sclerotic process. When the French, Dutch, and Belgian stock markets merged to form Euronext last year, they created one corporate umbrella for three markets, each with distinct sets of regulations. The three plan to harmonize their rules this year. Getting all of Europe to do the same, however, will be an arduous task. By William Echikson in Louvain-la-Neuve, Belgium _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Global Bourses? Hold Your Horses (int'l edition) TABLE: Bourses Get the Urge to Merge A Common Market, but Not for Equities (int'l edition) ONLINE EXTRA: "European Regulation Today Is Totally Outdated" INTERACT E-Mail to Business Week Online

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