Possible merger of TSE and ECDS

13.12.1999 TLN

Tallinn Stock Exchange Press Release
December 13, 1999

On December 10, the Supervisory Board of Tallinn Stock Exchange (TSE) authorised the TSE management to start negotiations with the Estonian Central Depository for Securities (ECDS) with the aim of deepening the co-operation, and possibly merging, the two organisations and to prepare the necessary documents.

The aim of the process is to create a stronger, more efficient and flexible organisation, which would be better able to satisfy the needs of its clients, while increasing its competitiveness in the context of international developments.

The united entity would be the focal point of the Estonian securities market infrastructure, furthering the interest of the securities market as a whole.

The two organisations are already similar in structure and culture and joint activities are taking place in many fields, such as cost-sharing in information technology and administrative expenses.

The two entities also have a relatively similar composition of shareholders. TSE shareholders have 75 per cent of ECDS shares, while ECDS shareholders hold a 42 per cent stake in TSE. The majority of shareholders in both organisations are market participants � commercial banks and brokerage companies. The merger would enable to create a stronger, more stable and better capitalised organisation, thereby decreasing risks without additional capital injections by owners.

In addition to increased efficiency through lower costs, synergy effects from additional joint activities, such as product development, marketing and market supervision, are expected.

The merger of ECDS and TSE would increase competition in the securities market, decreasing costs to end customers � investors � and speeding up the development of the securities market as a whole. Market participants, especially brokerages, would have better opportunities to offer integrated services.

The TSE management plans to submit the merger programme, which outlines the strategy and structure of the merged organisation and concrete merger conditions, by the end of first quarter next year. The management aims to submit the merger agreement for approval to the 2000 annual general meeting of shareholders.

Additional information:

Eva Palu
Head of Investor Relations Dpt
Tallinn Stock Exchange
Tel: +372 64 08 840
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