Select Committee on Treasury Minutes of Evidence

Letter from Sir Brian Williamson, Chairman, London International Financial Futures and Options Exchange (LIFFE) and M Jean Francois Theodore, Chairman of the Managing Board of Euronext N.V. and Chief Executive Officer

  Thank you for your letters of 12th December 2001 inviting LIFFE (Holdings) plc and Euronext N.V. respectively to submit separate written evidence in relation to the Treasury Committee's inquiry into the background to, and implications of, the takeover of LIFFE (Holdings) plc by Euronext U.K. plc, a wholly-owned subsidiary of Euronext N.V.

  Our written evidence is contained in the two submissions enclosed, from LIFFE and from Euronext. The main reasons for the Exchanges combining are:

    (i)  The combination of LIFFE and Euronext will treble the volume of business that is transacted through LIFFE's world-beating electronic trading system, LIFFE CONNECTTM.

    (ii)  Euronext and LIFFE have highly complementary customer and product bases. LIFFE is particularly strong in interest rate futures and options, whereas Euronext's deepest and most mature derivatives markets are in equity-related products.

    (iii)  The consolidated business meets customer needs. It gives customers access to a wider range of products in a larger and more liquid market through a single trading platform. This offers the potential for greater efficiency for the combined customer base.

    (iv)  We believe the combination of LIFFE and Euronext will be a catalyst for consolidation of European clearing and settlement, which has been long-awaited by international users of derivative markets.

    (v)  The management teams of Euronext and LIFFE have a common vision based on delivering excellent customer service through the provision of technology-rich trading platforms and innovative and liquid products.

  We hope that our written evidence will be of assistance to the Treasury Committee and we look forward to discussing the issues covered by the Committee's inquiry during the oral hearing on 22 January.


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