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Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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March 1, 2002

Survival Plan for Pan-European Market

By Gregory Bresiger

Europe's single stock market experiment is going through a trial period.

Neither a disaster nor a roaring success, Virt-x PLC., partly owned by the Swiss Exchange SWX, is struggling. Virt-x officials are trying to increase its share of the pan-European blue-chip stock trading beyond its usual daily range of seven percent to eight percent. (It had a target range of 10 percent).

The new market's share of business in the stocks that comprise the Dow Jones 600 has stagnated after seven months of operations. That's despite the prepaid commissions of some of its big users, as well as the support of a large number of prestigious firms. Disappointed, Virt-x is changing strategies. It is now going to focus on improving the prices to buy and sell shares in the home markets of the biggest blue-chip companies. And it has called on the members of an 11-firm group, which owns about 40 percent of the Virt-x, to make markets in selected stocks and to add one stock per week to its list.

The exchange now considers itself competitive in about 30 percent of the stocks that constitute the Dow Jones Stoxx 50 and the Dow Jones EuroStoxx 50 indexes. The Virt-x turnaround strategy is based on the expectation that - with better prices - traders will not be able to ignore its market. Results have been mixed. Observers speculate the strategy has about six months to work if the exchange is going to survive.