RAY . ALLEN

European Stock Exchanges and Sarbanes-Oxley

European stock exchanges were now making play of the burdens of Sarbanes-Oxley, said Mr. Thain, but this would be a temporary phenomenon. "Sarbanes-Oxley will get picked up by European regulators. The regulatory arbitrage that the European exchanges are marketing will not last very long." Mr. Thain also said he believed the SEC would amend controversial proposals for share trading reforms, which have been criticized by the NYSE and institutional investors.

The advantage gained by European stock exchanges from the regulatory impact of the Sarbanes-Oxley Act is likely to erode as European regulators try to match the US legislation, John Thain, the chief executive of the New York Stock Exchange, predicted yesterday.

Mr. Thain, speaking at the World Economic Forum in Davos, admitted that European companies were more hesitant about seeking a listing in the US because of the costs of having to comply with Sarbanes- Oxley. But he said the effect was likely to fade as the EU moved closer to US practice.

Mr. Thain also backed recent remarks by William Donaldson, chairman of the US Securities and Exchange Commission, who said the SEC would examine ways to ease the impact on foreign-listed companies of complying with Sarbanes-Oxley and could make it easier for them to deregister from the US market.

"The fact he was willing to address these issues is a big plus, and I am very supportive of his comments," said Mr. Thain. He said French and German companies in particular were concerned about the impact of complying with Section 404 of Sarbanes-Oxley and the difficulty of de-registering.

Mr. Thain said he believed European and Asian companies would still want to list on US exchanges because it gave them access to a large pool of investors. "It is a good sign for investors for them to be able to say that they are compliant with the world's most stringent listings requirements," he said.

European stock exchanges were now making play of the burdens of Sarbanes-Oxley, said Mr. Thain, but this would be a temporary phenomenon. "Sarbanes-Oxley will get picked up by European regulators. The regulatory arbitrage that the European exchanges are marketing will not last very long." Mr. Thain also said he believed the SEC would amend controversial proposals for share trading reforms, which have been criticized by the NYSE and institutional investors.

He said the proposal as it stood would reduce the amount of competition among stock exchanges and "nationalize the US market".

"I do not think that, in the end, this is the structure that will be approved." However, he said that a less radical reform of the US national market rules was likely to be passed which would fit with the NYSE's own proposed trading reforms. These would encourage more electronic trading of listed stocks.

Mr. Thain confirmed that the NYSE was considering extending its trading hours.