The eight European stock exchanges developing a platform to trade the shares of Europe's top 300 companies are under intense pressure to make their "Big Idea" a reality before the technological revolution changing the way shares are traded makes it obsolete.
The leading equity trading houses - which first urged the London and Frankfurt exchanges to create the common trading platform - are getting frustrated at the slow pace at which it is being developed. They used the opportunity of a gathering of exchange heads in Milan last week to put their message across.
Mr Paul Roy, global head of equities at Merrill Lynch, told the European Financial Markets Convention that "events have moved on since the alliance was first announced" last July. He was referring to the surge in stock trading on the Internet, the rise of alternative alliances, and the development of electronic communications networks, which are a type of stock exchange in all but name.
The eight exchanges - London, Frankfurt, Paris, Brussels, Amsterdam, Milan, Madrid and Zurich - are trying to harmonise trading hours and listing and disclosure requirements to edge the project forward. But they are vague on when the "superbourse" will arrive, other than that it is planned "from 2000". Given the speed at which financial markets are developing, that might be too late. "We have to get our act together and look at competition not only in Europe but across the Atlantic," Mr Roy warned. Some of those working on the superbourse project admitted that progress to date - mainly allowing cross-membership between the London stock exchange and Deutsche Borse and repatriating liquidity - may have failed the "so what?" test.
But the exchanges insist progress is being made on several fronts and that it will arrive on schedule.
The technology issue is crucial, however, and is one reason for the lack of real progress. Both London and Frankfurt - which remain in the driving seat on the project despite giving the other six equal status last month - have spent heavily on technology in recent years and appear reluctant to cede on the issue.
Any hold-up would be a gift to competitors, according to technology experts. Bertrand Lavayssiere, head of financial services at Gemini Consulting, pointed out that stock trading on the internet in the US had grown fourfold in the last two years and accounted for one in every seven equity trades at the end of 1998.
The rise of trading technology begs the question of whether the new market for Europe's top stocks should be a single trading platform or a "virtual market" along the lines of across-membership agreement among the Paris, Zurich and Milan bourses. Certainly, the Swiss see the latter as a fall-back option if events overtake the superbourse plan.
Whether the eight exchanges can develop the new superbourse in time to beat the challenge from alternative trading systems will depend on progress in the next few months on technology and harmonisation issues. They also need to predict how their competitors will react.
