The association representing Dutch marketmaking firms has warned that the proposed market structure for small and midcap stocks on Euronext, the merger of the exchanges in Paris, Amsterdam and Brussels, could lead to a fall in liquidity and to a wave of stocks seeking listings elsewhere.

In response, the Vereniging van Hoekliden (Specialist Association) which represents specialist brokers in Amsterdam, has proposed its own hybrid structure to maximise liquidity in smaller stocks. Under the Euronext merger, small cap stocks in which liquidity is already low will not trade continuously on the order-driven trading system. Instead they will trade in periodic auctions to concentrate liquidity. However, the specialists in Amsterdam, which are effectively the same as marketmakers, warned yesterday that this system would force small and midcap stocks to look elsewhere.