This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 PARIS 001822 
 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS CEA 
STATE FOR EB and EUR 
TREASURY FOR DO/IM 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
USDOC FOR 4212/MAC/EUR/OEURA 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV FR
SUBJECT: EURONEXT PARIS REFORMS ITS OFFERINGS, GOING FOR 
SMALL AND MID CAPITALIZATIONS 
 
 
¶1.  SUMMARY.  Euronext, the stock market operator based in 
Paris, has initiated major changes in its offerings, to 
stimulate small and mid capitalizations.  It now has a 
single well-organized list ("Eurolist"), and has created new 
indices along with a new small and mid cap expert status for 
analysts.  These changes respond to the GOF's objective to 
help small and medium-sized enterprises (SMEs) gain easier 
access to the financial markets.  Euronext Brussels, 
Amsterdam and Lisbon are in the process of making similar 
changes.  END SUMMARY. 
 
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EURONEXT Creates a Single List for Easier Reading 
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¶2.  In June 2004, after consulting widely with issuers, 
intermediaries, investors and its shareholders, Euronext 
Paris announced it would make changes in the organization of 
its stock lists in January 2005.  Changes became effective 
on February 18, 2005.  Euronext Paris has merged the three 
regulated markets of the Paris stock exchange - the cash 
market of blue-chip companies ("Marche au Comptant"), the 
regulated market of medium-sized companies ("Second Marche") 
and the "Nouveau Marche" (growth segment) on which new 
companies, especially smaller ones with an emphasis on 
growth and technology, could raise start-up capital.  The 
merger results in a single list called "Eurolist", which is 
organized by alphabetical order and is split in three 
segments based on the capitalization of French companies: 
small caps (up to 150 million euros), mid caps (from 150 
million to 1 billion euros), and large caps (over 1 billion 
euros). 
 
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Changes Aim to Stimulate Small and Mid Caps 
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¶3.  The Eurolist essentially aims to benefit small and 
medium-sized caps by improving their visibility and 
liquidity, and thus their expansion.  Andre Levy-Lang, co- 
chairman of the Euronext Steering Committee, stated "the 
Eurolist will serve SMEs well, raising their stock market 
profile."  SMEs account for 85 percent of French listed 
companies.  They play a key role in the French economy, and 
have significant growth potential, but often are limited by 
the lack of funds. 
 
¶4.  As part of the same program, Euronext created a special 
small and mid-cap expert status ("experts en valeurs 
moyennes") for brokers devoting specialists to the analysis 
of SME's financial results, and to marketing and sale of 
listed SMEs' stocks.  Approved brokers will have to provide 
annual analytical reports, half-year updates, and material 
information messages as much as necessary.  Each broker will 
have to commit to tracking 60 mid-caps stocks including 20 
with caps below 150 million euros, and 10 with an annual 
volume of transactions smaller than 2,500 trades.  Euronext 
has already selected ten brokers:  Arkeon Finance, Aurel 
Leven Securities, Credit Agricole Cheuvreux, CM-CIC 
Securities, Gilber Dupont, Ixis Midcaps, Oddo & Cie, 
Potzamparc, Fideuram Wargny, and Euroland Finance (when 
Euroland  gets final approval).  Brokers have until March 31 
to apply for the new status.  Euronext will sponsor a 
marketing program, and support promotional campaigns to 
improve the visibility of mid-cap experts and help them in 
their commitments. 
 
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New Indices Tracks Small and Medium Caps 
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¶5.  Euronext also has introduced new indices that focus on 
SMEs: 
 
-  The "CAC Next 20" consisting of the 20 stocks the most 
representative in terms of capitalization and liquidity 
after the CAC 40 stocks; the "CAC Mid 100" consisting of the 
top 100 stocks with caps within 4 billion euros and 250 
billion euros; the "CAC Small 90" of the 90 stocks, with 
caps within 250 million euros and 50 million euros; the "CAC 
Mid et Small 190" regrouping the "CAC Mid 100" and the "CAC 
Small 90" stocks. 
 
-  Many SMEs are active in the high technology sector.  A 
new index, the "CAC IT20" represents the top 20 stocks of 
the "CACIT".  (The "ITCAC 50", the index of the 50 stocks 
formerly listed on the "Nouveau Marche" will be replaced in 
June 2005.) 
 
-  For stocks cross-listed in Amsterdam, Brussels, Lisbon 
and Paris, a new index, the "NextCAC 70" represents the top 
70 stocks of each of them. 
 
¶6.  Euronext Paris will eliminate Second Market, New Market 
and Mid CAC indices by June 2005, but will continue to 
publish the blue-chip "CAC 40", the "SBF 80" (the top 80 
caps), the "SBF 120" (the top 120 caps), the "SBF 250" (the 
top 250 caps), and the CAC IT (high-technology sector 
index).  Euronext Paris will launch a comprehensive index of 
around 500 stocks, the "CAC All Shares", in June 2005. 
Despite its name, the new index will exclude 5% of listed 
stocks because of their poor liquidity. 
 
¶7.  A group of experts is responsible for handling and 
controlling reliability and representativeness of indices 
listed in Paris.  Headed by Euronext Paris' chairman Jean- 
Francois Theodore, the group includes experts at Bank of 
France, National Statistical and Economic Studies Institute 
INSEE, SEC counterpart AMF, the French Association of 
Financial Analysts SFAF, and the think tank for economic 
growth and company expansion Rexecode. 
 
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A new Market "Alternext" will Give Easier Access to European 
Companies 
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¶8.  Euronext Paris is to set up a new market called 
"Alternext" to offer companies a new organized market (yet 
unregulated based on legal definition of the European 
Financial Services directive) with more consumer protection 
than the "Marche Libre", which will continue to operate. 
The new market will give European companies new 
opportunities for raising capital.  Many companies have 
already expressed their interest in the new market. 
According to Poweo's CEO, "Alternext will attract new 
investors, notably "Anglo-Saxons" (French short-hand for 
persons of American, British, and Australian origin) that 
cannot participate in the "Marche Libre." 
 
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Comment 
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¶9.  By implementing these financial markets reforms, 
Euronext is putting into operation GOF policy to facilitate 
the access of SMEs to financial markets, which should help 
the SMEs expand, thus boosting economic growth.  The new 
system also is in line with the EU goals of convergence and 
financial transparency, since all listed companies are 
subject to the same regulations. 
LEACH