DUTCH ON PROPOSED NYSE-EURONEXT MERGER

UNCLAS THE HAGUE 001391 SIPDIS SIPDIS STATE FOR EUR/UBI ERIC FALLS USDOC FOR 4212/USFCS/MAC/EURA/OWE/DCALVERT TREASURY FOR IMI/OASIA/VIMAL ATUKORALA PARIS ALSO FOR OECD STATE PLEASE PASS FEDERAL RESERVE E.O. 12356: N/A TAGS: ECON EFIN EINV NL SUBJECT: DUTCH ON PROPOSED NYSE-EURONEXT MERGER THIS CABLE CONTAINS PROPRIETARY INFORMATION. IT IS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY. ¶1. (SBU) SUMMARY: The Dutch government does not oppose, in principle, the proposed merger between the Amsterdam- based Euronext and the New York Stock Exchange (NYSE),but shares industry concerns regarding the potential application of U.S. regulations to Euronext-listed companies. Dutch law allows the Ministry of Finance (MOF) to approve or block the merger. Senior MOF officials told Emboffs they will seek assurances from the U.S. Securities and Exchange Commission (SEC),U.S. Congress, and others to address regulatory concerns prior to decision. END SUMMARY. ¶2. (SBU) Dirk Schoenmaker, Deputy Director of Financial Markets at the MOF, explained to Emboffs June 19 that the Dutch have no sovereignty or national interest concerns related to the proposed NYSE-Euronext merger. After approving the merger between the Amsterdam stock exchange with those of Brussels and Paris to create Euronext in 2000, they now are happy to let the market decide whether this merger makes sense, he said. ¶3. (SBU) But Schoenmaker did express concern that U.S. regulations such as Sarbanes Oxley, the Patriot Act, and country-specific sanctions might be applied to companies listed on Euronext's exchanges. He acknowledged SEC statements to the contrary, but said the Dutch government would welcome a political commitment from U.S. lawmakers. Even if current U.S. legislation would not apply to a Euronext listing, future laws might. A number of large Dutch companies have expressed similar concerns, he added. Because Euronext is legally incorporated in Amsterdam, the MOF needs to approve any significant change in the holdings of the company's shares. Before deciding, the MOF will seek assurances from Congress and others on the scope of future U.S. regulation. ¶4. (SBU) The Dutch are studying current U.S. regulations, and are working to identify Dutch companies that could be affected. Schoenmaker indicated that the Dutch aim to resolve the issue before mid-August, ahead of an expected September shareholders' vote on the merger. Talks between Euronext regulators and the SEC are underway and the MOF will accelerate its own consultations with regulators and the U.S. Departments of Treasury and Justice over the next few weeks. Schoenmaker added that the Dutch are counting on NYSE to address these issues with U.S. authorities as well. BLAKEMAN