OMHEX, which operates the Swedish and Finnish stock exchanges, says the merged securities depository would cover 70% of Nordic CDS activities. VPC's CEO Kjell Arvidsson will become group CEO of the facility.

Under the intended merger, VPC would offer OMHEX new shares and cash as a consideration for all outstanding shares in APK. The total value of the transaction would amount to approximately SKr1.020 million.

Following the transaction, OMHEX and the four principal owners of VPC - FöreningsSparbanken, Nordea Bank, Skandinaviska Enskilda Banken and Svenska Handelsbanken - will each own approximately 19.8% of the Nordic depository (NCDS). Finnish market participants will be invited to subscribe for new shares representing up to a 10% ownership of NCSD.

The letter of intent also covers the implementation of OMHEX's settlement and depository system Exigo, in the Finnish market. The new depository would also acquire a licence to use and develop the Exigo system in the Nordic area.

Jukka Ruuska, President of HEX Integrated Markets and deputy CEO of OMHEX, says: "The common CSD platform and harmonisation of trading as well as clearing and settlement practices will generate benefits for all market participants by facilitating access to and operations in the Nordic markets, thus making it also more attractive to new participants."

The move was welcomed by Hans-Ole Jochumsen, president and CEO of the Copenhagen Stock Exchange, who noted that foreign brokers will soon be able to trade across the Nordic markets using the common Saxess platform but would still have to deal with distinct national depositories for settlement.

"The real challenge faced by the Danish equity market as well as the other Nordic equity markets is the fact that all countries have their own clearing and settlement systems," he says. "The proposed merger and the introduction of the same settlement system in Finland and Sweden may be the first step towards one common settlement system for the entire Nordic region."