The Euronext exchange classifies itself as a pan-European securities exchange. It's the largest exchange in continental Europe, representing a combined market capitalisation of €2.2 trillion, with over €6 billion of securities traded daily. The exchange offers products and services in Paris, Amsterdam, Brussels, Lisbon and London.
The Euronext exchange offers trading for stocks of companies listed across its markets, in addition to bonds, ETFs, equity derivatives, foreign exchange derivatives, commodities, indices, structured notes, warrants and certificates. The exchange includes listings of more than 1,300 stocks; 4,400 fixed-income securities; 500 mutual and exchange traded funds; 20 indices; nine regional commodities; six European region currency contracts and five categories of equity derivative contracts.
The Euronext began taking shape in 2000 following a merger between the Brussels, Amsterdam and Paris stock exchanges, and a later addition of the Lisbon Stock Exchange. The origins of what is today known as Euronext dates to 1611 with the opening of the Amsterdam stock exchange, which was the first of its kind in the world.
The Amsterdam exchange got its start when the Verenigde Oostindische Compagnie, a large shipping company doing business in the Far East, sold shares as a manner to finance its operations. Business on the exchange grew to include commodities and other financial instruments such as options.
Although shares were also traded in France as early as 1540, the first official exchanges in France and Belgium were established only in 1801 under the rule of Napoleon Bonaparte. The Lisbon Stock Exchange initially began operating in 1769 as the Assembleia dos Homens de Negócio, and by 1999 it had evolved into the Bolsa de Valores de Lisboa e Porto (BLVP).
Following its merger in 2000, the Euronext group in 2001 acquired the London International Financial Futures and Options Exchange; and in 2002 it acquired the Lisbon Stock Exchange. In May 2006, as part of an effort of fend off a possible purchase of Euronext by Nasdaq, NYSE Group entered a merger agreement with Euronext in a transaction worth US$10 billion.
In 2008 and 2009, NYSE Euronext developed its Universal Trading Platform, an electronic trading platform for bond, equities, options and futures markets. The new holding company combining those businesses was named NYSE Euronext, and it was subsequently listed on the New York Stock Exchange and Euronext Paris.
In 2010, NYSE Euronext launched Euronext London, a London-based securities market aimed at attracting international issuers. The following year, German exchange group Deutsche Börse entered talks for a proposed US$9.53 billion purchase of NYSE Euronext that would create the world's largest multi-market trading exchange. In December 2011, Deutsche Börse obtained approval from U.S. antitrust authorities to go ahead with the acquisition. However, the European Union blocked the planned acquisition of NYSE Euronext in February 2012 amid concerns the exchange would control more than 90% of the trade in European derivatives.
In November 2013, the global market and clearinghouse operator Intercontinental Exchange (ICE) acquired NYSE Euronext for $8.2 billion. Following the acquisition, ICE separated the continental European operations of NYSE Euronext and Euronext London from its other operations to launch a public offering of a newly formed entity named Euronext N.V. in June 2014. The company's shares were priced at €20 each to raise US$1.9 billion. ICE, however, maintained Liffe and NYSE as separate entities.
In order to stabilise Euronext, a consortium of 11 investment groups took a stake in the company. These investors, referred to as "reference shareholders," own 33.36% of Euronext's capital and agreed to maintain a three-year lockup period: Euroclear, BNP Paribas, BNP Paribas Fortis, Société Générale, Caisse des Dépôts, BPI France, ABN Amro, ASR, Banco Espirito Santo, Banco BPI and Belgian holding public company SFPI.
Together, they hold three seats on a nine-member board. Since its IPO, Euronext N.V. has operated as an independently listed company, with shares traded in Paris, Amsterdam and Brussels under the symbol ENX.
Alternext is a specialised market segment for small- and medium-sized companies that lack resources to satisfy requirements of the larger regulated market. The segment includes more than 180 listed companies with a total market capitalisation of €8 billion.
Universal Trading Platform
In 2010, Euronext introduced its Universal Trading Platform, an electronic trading service, to facilitate trading across markets and products. Since its launch, the company has made the service available to operations in Europe, Africa and the Middle East, including exchanges in the cities of Warsaw, Amman, Beirut, Muscat and Tunis.
Euronext manages the following main national European equity indices: AEX-index (Dutch Stocks Benchmark), BEL 20 (Belgian Stocks Benchmark), CAC 40 (French Stocks Benchmark) and PSI 20 (Portuguese Stocks Benchmark).
Some of the relevant international competitors for Euronext in equities and derivatives markets include: Deutsche Börse, London Stock Exchange Group, Chicago Mercantile Exchange, BATs Global Markets and Nasdaq OMX Group.
Euronext NV operates with a market share of 14.7% in Europe and the U.K. It's the third-largest securities exchange in those markets behind BATs with 24.4%, and the London Stock Exchange with 18.9%.
Euronext controllers say they aim to build on a role "as a major player in financing the local economies of (their) key countries and continue to promote the principles of the unique Euronext model, seeking opportunities to consolidate European liquidity for the benefit of issuers, investors and the real economy." That will include development of an existing derivatives business "with [a] focus primarily on growing equity derivatives and commodity derivatives contracts."
The group says it also plans to enhance issuer access to sources of capital and funding, and enable efficient risk transfer to participants in the national and regional economies of Europe through "a diverse market offering and strengthening a position as a capital-raising centre for Europe."
In late 2015, Euronext was benefitted by a Dutch government regulatory decision that lifted restrictions on its capital provision requirements. With the favourable decision, some analysts have noted that Euronext could be well positioned to participate in more merger and acquisition activity in the future as a manner to compensate for some loss of market share in derivatives trading.
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Senior Market Specialist
Russell Shor (MSTA, CFTe, MFTA) is a Senior Market Specialist at FXCM. He joined the firm in October 2017 and has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the International Federation…