EURONEXT PARIS REFORMS ITS OFFERINGS, GOING FOR

UNCLAS SECTION 01 OF 02 PARIS 001822

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E.O. 12958: N/A
TAGS: EFIN ECON PGOV FR
SUBJECT: EURONEXT PARIS REFORMS ITS OFFERINGS, GOING FOR
SMALL AND MID CAPITALIZATIONS



1. SUMMARY. Euronext, the stock market operator based in
Paris, has initiated major changes in its offerings, to
stimulate small and mid capitalizations. It now has a
single well-organized list ("Eurolist"),and has created new
indices along with a new small and mid cap expert status for
analysts. These changes respond to the GOF's objective to
help small and medium-sized enterprises (SMEs) gain easier
access to the financial markets. Euronext Brussels,
Amsterdam and Lisbon are in the process of making similar
changes. END SUMMARY.

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EURONEXT Creates a Single List for Easier Reading
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2. In June 2004, after consulting widely with issuers,
intermediaries, investors and its shareholders, Euronext
Paris announced it would make changes in the organization of
its stock lists in January 2005. Changes became effective
on February 18, 2005. Euronext Paris has merged the three
regulated markets of the Paris stock exchange - the cash
market of blue-chip companies ("Marche au Comptant"),the
regulated market of medium-sized companies ("Second Marche")
and the "Nouveau Marche" (growth segment) on which new
companies, especially smaller ones with an emphasis on
growth and technology, could raise start-up capital. The
merger results in a single list called "Eurolist", which is
organized by alphabetical order and is split in three
segments based on the capitalization of French companies:
small caps (up to 150 million euros),mid caps (from 150
million to 1 billion euros),and large caps (over 1 billion
euros).

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Changes Aim to Stimulate Small and Mid Caps
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3. The Eurolist essentially aims to benefit small and
medium-sized caps by improving their visibility and
liquidity, and thus their expansion. Andre Levy-Lang, co-
chairman of the Euronext Steering Committee, stated "the
Eurolist will serve SMEs well, raising their stock market
profile." SMEs account for 85 percent of French listed
companies. They play a key role in the French economy, and
have significant growth potential, but often are limited by
the lack of funds.


4. As part of the same program, Euronext created a special
small and mid-cap expert status ("experts en valeurs
moyennes") for brokers devoting specialists to the analysis
of SME's financial results, and to marketing and sale of
listed SMEs' stocks. Approved brokers will have to provide
annual analytical reports, half-year updates, and material
information messages as much as necessary. Each broker will
have to commit to tracking 60 mid-caps stocks including 20
with caps below 150 million euros, and 10 with an annual
volume of transactions smaller than 2,500 trades. Euronext
has already selected ten brokers: Arkeon Finance, Aurel
Leven Securities, Credit Agricole Cheuvreux, CM-CIC
Securities, Gilber Dupont, Ixis Midcaps, Oddo & Cie,
Potzamparc, Fideuram Wargny, and Euroland Finance (when
Euroland gets final approval). Brokers have until March 31
to apply for the new status. Euronext will sponsor a
marketing program, and support promotional campaigns to
improve the visibility of mid-cap experts and help them in
their commitments.

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New Indices Tracks Small and Medium Caps
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5. Euronext also has introduced new indices that focus on
SMEs:

- The "CAC Next 20" consisting of the 20 stocks the most
representative in terms of capitalization and liquidity
after the CAC 40 stocks; the "CAC Mid 100" consisting of the
top 100 stocks with caps within 4 billion euros and 250
billion euros; the "CAC Small 90" of the 90 stocks, with
caps within 250 million euros and 50 million euros; the "CAC
Mid et Small 190" regrouping the "CAC Mid 100" and the "CAC
Small 90" stocks.

- Many SMEs are active in the high technology sector. A
new index, the "CAC IT20" represents the top 20 stocks of
the "CACIT". (The "ITCAC 50", the index of the 50 stocks
formerly listed on the "Nouveau Marche" will be replaced in
June 2005.)

- For stocks cross-listed in Amsterdam, Brussels, Lisbon
and Paris, a new index, the "NextCAC 70" represents the top
70 stocks of each of them.


6. Euronext Paris will eliminate Second Market, New Market
and Mid CAC indices by June 2005, but will continue to
publish the blue-chip "CAC 40", the "SBF 80" (the top 80
caps),the "SBF 120" (the top 120 caps),the "SBF 250" (the
top 250 caps),and the CAC IT (high-technology sector
index). Euronext Paris will launch a comprehensive index of
around 500 stocks, the "CAC All Shares", in June 2005.
Despite its name, the new index will exclude 5% of listed
stocks because of their poor liquidity.


7. A group of experts is responsible for handling and
controlling reliability and representativeness of indices
listed in Paris. Headed by Euronext Paris' chairman Jean-
Francois Theodore, the group includes experts at Bank of
France, National Statistical and Economic Studies Institute
INSEE, SEC counterpart AMF, the French Association of
Financial Analysts SFAF, and the think tank for economic
growth and company expansion Rexecode.

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A new Market "Alternext" will Give Easier Access to European
Companies
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8. Euronext Paris is to set up a new market called
"Alternext" to offer companies a new organized market (yet
unregulated based on legal definition of the European
Financial Services directive) with more consumer protection
than the "Marche Libre", which will continue to operate.
The new market will give European companies new
opportunities for raising capital. Many companies have
already expressed their interest in the new market.
According to Poweo's CEO, "Alternext will attract new
investors, notably "Anglo-Saxons" (French short-hand for
persons of American, British, and Australian origin) that
cannot participate in the "Marche Libre."

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Comment
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9. By implementing these financial markets reforms,
Euronext is putting into operation GOF policy to facilitate
the access of SMEs to financial markets, which should help
the SMEs expand, thus boosting economic growth. The new
system also is in line with the EU goals of convergence and
financial transparency, since all listed companies are
subject to the same regulations.
LEACH