Euronext looks to beef up as LSE/Deutsche Boerse merge
The £21bn deal being negotiated by London Stock Exchange with Deutsche Boerse would create an entity large enough to eclipse Euronext, prompting the exchange operator to seek a partner of its own. Euronext is said to have entered into exclusive talks to acquire a 20% stake in EuroCCP, a pan-European equity Central Counterparty, for €14m; it has also revealed a new strategic plan to ramp up sales, reduce costs and improve technology.

Euronext, Europe’s largest Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, has entered into exclusive talks to acquire a sizable stake in EuroCCP, a Central Counterparty (CCP) for pan-European equity markets, for a sum of $15.9 million (€14.0 million), according to a Euronext statement.

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The deal would see Euronext acquiring a 20% stake in EuroCCP, which would include contribution to regulatory capital, pending customary closing adjustments and requisite regulatory approval. As a leader in pan-European equity markets, the partial acquisition of EuroCCP would ultimately facilitate additional clearing and settlement capabilities for Euronext, and will help allow existing clients to benefit from significant operational and cost efficiencies.

Per the acquisition, Euronext will also offer several options in clearing within the Eurozone through the adoption of a preferred CCP model across its diverse equity markets. It is worth noting that the 20% stake in EuroCCP will be shared by Euronext, ABN Amro Clearing Bank, Bats Europe, The Depository Trust & Clearing Corporation (DTCC), and Nasdaq.

In addition, Euronext will also be launching a Preferred Clearing service in tandem with the deal, in a bid to help provide trading participants additional CCPs. Market participants will be able to select EuroCCP as their CCP.

Stéphane Boujnah, Chairman and CEO, Euronext NV.

According to Stéphane Boujnah, Chairman and Chief Executive Officer (CEO) of the Managing Board of Euronext NV., in a recent statement on the acquisition: “Our investment in EuroCCP and the implementation of a preferred CCP model will ensure the long-term delivery of clearing choice for our diverse range of equity clients. It further reduces the frictional costs of trading on our equity markets.”

“This is a step forward in our commitment to offer optionality to all our clients in the Eurozone and to power pan-European capital markets to finance the real economy,” Boujnah added.

“Sustaining competition in clearing has long been our goal at EuroCCP and we are delighted that Euronext joins us in this vision as a strategic investor and service partner. We look forward to working closely with them on the roll-out of their preferred clearing model”, reiterated Jan Bart de Boer, Chairman of the Supervisory Board of EuroCCP and Chief Commercial Officer, ABN AMRO Clearing, in an accompanying statement.

Earlier today, Euronext released its financial metrics for the Q1 2016, which was characterized by an uneven performance in revenues.