Market Watch

Brussels, Paris put on e-derivatives map

Euronext.Liffe is set to roll out electronic derivatives trading throughout Europe. The UK-based exchange, formed after Euronext’s purchase of the London International Financial Futures and Options Exchange at the end of 2001, is due to transfer the Brussels and Paris derivatives markets onto its electronic trading platform Liffe Connect this month and next month respectively. The second phase will see Amsterdam and Lisbon migrated soon after, revealed Max Butti, product manager for universal stock futures at Euronext.Liffe. Automated trading will improve transparency and facilitate global trading. The exchange, which combines the derivatives businesses of Amsterdam, Brussels, Lisbon and Paris, claims to conduct three times as much business as its nearest rival, the German exchange Eurex. From January to the end of October 2002 Euronext.Liffe handled E155,000bn of transactions.

Germans bow to fund houses’ tax demands Product promoters in Germany are to have a level playing field when the government abolishes tax discrimination against foreign-based funds in January 2004. But a question remains over what the new equal rate of taxation will be. The government has bowed to pressure from the European Union and fund groups such as Fidelity and Gartmore to end current discrimination, which entails a 7.5 per cent tax on dividends from domestic products and 15 per cent for products domiciled overseas. Klaus-Jurgen Baum, managing director of Fidelity Investment Services Germany, said: “Given the current financial condition of the government, they could settle for a higher rate”. Contrary to popular perceptions, the law should affect German and foreign fund promoters alike, since domestic players are increasingly basing their funds outside Germany. According to Mr Baum, 50 per cent of products manufactured by German companies are domiciled in Luxembourg and Dublin.