Posted on Nov 5, 2020 at 7:22 PMUpdated Nov 5, 2020, 8:47 PM
A third trimester “Solid” for Euronext. The turnover of the pan-European stock exchange operator increased by 12.7% to 204.8 million euros, driven by post-market activities, and in particular the consolidation of the results of the Danish central depository VP Securities. Trading revenues rose 7.3% thanks to the strong activity of the Nordpool Energy Exchange, which offset a drop in trading volumes – and therefore turnover on the equity markets (-0, 2%) and derivatives (-6.3%). Listing activities, especially IPOs, performed well, particularly in Oslo Square. Net income increased by more than 10% to 70.2 million euros.
During the press conference, Stephane Boujnah, CEO of Euronext, welcomed the agreement reached with the London Stock Exchange Group (LSEG) for the sale of Borsa Italiana. The transaction, which will give rise to the first equity market in Europe, is expected to be finalized during the first half of 2021, subject to the approval of the transaction by the Euronext general meeting on November 20, and the agreement from the European Commission to the merger between LSEG and Refinitiv. According to Bloomberg, the British group would have proposed Thursday to put in place rules of non-discrimination vis-à-vis its competitors in the provision of market data and transaction clearing activities, to complete reassurance in Brussels. The European competition authorities will soon begin their market surveys before delivering their decision by January 15.
Stéphane Boujnah was especially eagerly awaited on the mega blackout that hit the Euronext markets – with the exception of Oslo – on October 19. The exchanges had been interrupted just after the opening, they had resumed around 1 pm only. “For players like us, whose role is to bring liquidity to the markets, such a closure prevents us from working, and may cause us to miss interesting transactions.», Regrets Dominique Ceolin, CEO of ABC Arbitrage. Then, at 5:30 p.m., the auction mechanisms that make it possible to set the latest share prices were not set up. The session then continued beyond the cut-off time, but Euronext decided to cancel all orders placed after 5.30 pm Another, more minor incident took place last Monday.
“What is problematic is that the end of the session is a crucial moment, particularly for the Paris Bourse, explains Antoine Pertriaux, head of research at Adamantia. It is at this time that more than 40% of trade is concentrated on the CAC 40. ” It also posed challenges for fund managers. The data available to assess the net asset value (the theoretical resale price) differed between suppliers. “We had to spend time the next morning to find out what the right prices were”, underlines a Parisian banker, who works for management companies.
“Ultimately, the damage seems to have been limited for” equity “traders, but more damaging for the derivatives market”, explains a market specialist. Actors who had bought or sold securities after 5:30 p.m. to cover their positions had these trades canceled. And, these difficulties have highlighted the impact that a failure could have on a computer system that manages such a number of financial centers. The Euronext trading platform is active on five of the six Euronext markets. The Oslo Stock Exchange, and Borsa Italiana, if its acquisition is confirmed, should adopt it in turn.
Stéphane Boujnah assured that the problem had been taken very seriously, explaining that the stock market operator had conducted in-depth discussions with regulators and with its major clients, to discuss the measures to be adopted. New procedures have already been put in place to strengthen the security of the system. He also recalled his attachment to the Euronext model, which offers its clients a liquidity point, an order book and a single IT system for their exchanges in a large part of continental Europe.