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
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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