Euronext issues Legal Advice regarding 'overspill' risk

06 December 2006

Euronext published a short summary of certain U.S. legal aspects of the proposed combination between Euronext and NYSE Group Inc. It has been prepared by Cleary Gottlieb Partners in response to recent statements of concern by various public figures and market organizations that the proposed combination could result in the application of U.S. laws and regulations to the Euronext markets. It states “that the risk of “overspill” of current U.S. securities laws and regulations into European markets as a result of the transaction is not real” and “that the risk of such “overspill” resulting from future changes in laws is remote.”

Among others, the legal advice states that ownership of Euronext by the new holding company (NYSE Euronext, Inc.) will not cause Euronext itself or its listed companies to become subject to U.S. exchange laws or regulations. The SEC does not have the power to assert such authority. The SEC will have authority only over the holding company and the New York Stock Exchange and NYSE Arca (the combined group’s U.S. exchanges), not over Euronext and its exchanges.

The SEC has publicly confirmed that joint ownership of a U.S. exchange and a non-U.S. exchange would not by itself result in the application of U.S. securities regulation to the listing or trading activities of the non-U.S. exchange.

The listed companies of a non-U.S. exchange (such as Euronext) will not become subject to the Sarbanes-Oxley Act and the SEC rules governing companies listed in the United States unless those companies voluntarily register their securities with the SEC. This is not only our view, but it has been unequivocally confirmed by SEC public statements.

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