In an effort to help further the development of the European bond market, Euronext NV and the Luxembourg Stock Exchange have signed a Memorandum of Understanding designed, which is also aimed at increasing their co-operation in several other areas.

The agreement, which is subject to the approval of regulatory authorities, covers the exchange of listing and trading technology as well as joint efforts to develop the corporate bond market. Under the agreement, Euronext is to adopt the tools used by the Luxembourg Stock Exchange for listing corporate bonds. The agreement also provides for all products listed on the Luxembourg Stock Exchange’s cash market to be made available on the Euronext trading system for cash products.

“Scheduled for rapid implementation, this move will expand the distribution of products listed on Luxembourg markets through the Euronext network, the prime provider of liquidity in Europe, and raise their profile with international and retail investors,” the exchanges said.

The agreement will give also members of Euronext markets direct access to products listed in Luxembourg, which is a European standard-setter for international securities transactions. Over 37,000 products are listed there, including 27,000 international bonds or almost 60% of the European total, representing 4,100 issuers from over 100 countries.

The agreement also calls for the creation of a 50/50 joint venture based in Luxembourg to define and co-ordinate marketing initiatives promoting the new European standards, defined by Euronext and the Luxembourg Stock Exchange, for the listing and trading of corporate bonds. To this end, a label covering operations linked to corporate bond issues on the two bourses will be launched shortly.

Finally, the agreement covers the sale of market data on corporate issues listed on Euronext member exchanges and in Luxembourg. Initially dedicated to corporate bonds and selected debt products (ABS, CDOs, covered bonds, mortgage bonds and TCNs), the agreement will in time be extended to other products.

“We welcome this agreement with the Luxembourg Stock Exchange, which will make it possible to trade all cash products listed on the Luxembourg Exchange on NSC, the pan-European platform for securities trading, and establish special links in corporate bonds, an area where the Luxembourg Stock Exchange is particularly well placed,” said Jean-François Théodore, chairman of the managing board and CEO of Euronext.

“The Luxembourg Stock Exchange, Europe’s leading exchange for international bond issues and Euronext, the prime pan-European bourse, are joining forces, without merging, to create an area for bond trading. This will free synergies that will generate mutual advantages for the two partners and their members by enhancing data flows and market liquidity,” added Raymond Kirsch, chairman of the board of directors of the Luxembourg Stock Exchange.