New regulatory framework for OMX deal

(OSAMA ABUGHANIM)   

A new regulatory framework to encompass the forthcoming link-up between the OMX Nordic exchange, Borse Dubai and Nasdaq will be in place by January 1, 2009, according to the Swedish Minister for Financial Markets.

Mats Odell dismissed concerns the vastly different regulatory environments of the United States and Europe would be problematic.

“Of course we are concerned about regulatory spillover,” Odell said.

“We will follow the UK example that no excessive regulations will be allowed. It will be principles-based regulation.

“This is a simple piece of legislation. It’s short and very effective and will provide the new market place encompassing OMX, Nasdaq and Borse Dubai with a very secure regulatory environment in Stockholm.”

Borse Dubai is expected to complete the acquisition of OMX on Thursday, having joined forces with Nasdaq to takeover the seven-country exchange.

The complex deal will see Borse Dubai acquire OMX and then transfer ownership to Nasdaq, with the latter two entities merging to create Nasdaq OMX.

In return, Borse Dubai will receive a 20 per cent stake in the new company, while the Dubai International Finance Exchange will be re-branded the Nasdaq-DIFX.

A pan-continental trading platform will then be created spanning the United States, Scandinavia and Dubai.

Odell said he did not know when this would become operational.

“This was a very good deal for all parties,” said Odell.

“The standalone alternative is not a good one for  OMX, especially in light of the rapid consolidation of this business. We welcome Nasdaq and Borse Dubai becoming partners.”

Odell said the Swedish Government was among the last of OMX shareholders to sell to the joint Nasdaq-Borse Dubai bid.

“We made a very careful investigation of the deal and we concluded it will have a very positive outcome.”

Odell believes the OMX deal will provide the platform for Nordic companies to attract investment from the Gulf and tap into the region’s vast liquidity, naming biotech firms and banks as some of those most likely to benefit.

“This is the most dynamic region in the world, with very strong capital muscles. UAE GDP growth is on a par with China,” he said.

Odell also believes the triangular partnership will enable new products to become available on the DIFX to help diversify the fledgling exchange.

Sovereign wealth funds (SWFs) have attracted criticism in Western markets, with some observers warning against foreign governments owning stakes in strategic companies, while others have questioned the motives of these funds.

Odell does not have any such fears over Borse Dubai, which is wholly-owned by the Dubai Government, becoming a key stakeholder in OMX.

He said: “Ownership is not important. What matters is the regulatory environment and we are masters of this.

“The Swedish state is reducing our ownership, but we have extensive experience of SWFs, which have been active in Sweden for more than 30 years.

“Our position in the European Union is that we are welcoming investments from these kind of funds. Of course, we look at these investments on a case-by-case basis.”

Central to Sweden’s economic development strategy is “Finansplats Stockholm”, which aims to cement the capital’s role as the financial hub for Scandinavia.

Odell said the OMX deal complements this plan, with the headquarters of the merged Nasdaq-OMX to be located in Stockholm, together with the European technical nerve centre of the newly-created company.