Spark Trader Limited Reports:
Euronext, the pan-European exchange, said on Monday it would clear all trades on its newly acquired Italian platform by 2024, helping the EU reduce its reliance on the London Stock Exchange for core financial activities after Brexit.
Most of euronext’s clearing for equities, derivatives and commodities is now handled by the LCH unit in Paris, which euronext has been unable to buy directly. Outlining its strategic priorities for 2024, Euronext chief executive Stephane Boujnah said the group would build on its acquisition of Milan Bourse earlier this year. Euronext operates seven stock markets in Europe. Boujnah said a closer link with a London clearing house was not as attractive as expanding an internal clearing house. The Clearing house is ultimately controlled by a company that has left the European Union since Brexit. “The numbers and the strategy are compelling.” While Euronext’s business is only a “small part” of LCH’s French operations, it will pay a break fee in 2023, when it completes a one-year notice period under current contracts by 2027.
The lSE said the loss of less than 1% of group revenue won’t affect its repo, credit-default swap and foreign-exchange clearing operations in Paris.
Boujnah said it would be up to the LSE to decide whether to buy euronext’s 11.1 percent stake in the Paris unit.
Mobile clearing to Italy is likely to welcome a key goal of EU policymakers trying to establish autonomy for eu capital markets and end reliance on the City of London since Brexit, with the London Stock Exchange’s dominant position in the euro zone, to relocate swap clearing to Deutsche Borse in Frankfurt.
Voluntary stock Exchange redundancies
Euronext’s new three-year strategy focuses on increasing the “ambition” of its largely traditional trading and clearing activities as larger rivals such as the LSE and INTERCONTINENTAL Exchange, owner of the New York Stock Exchange, delve into data.
Since The BREXIT vote in December, Amsterdam has become Europe’s largest stock market, Boujnah said, with a large amount of stock trading shifting from London to the EU and the Dutch capital attracting international companies that would otherwise list in London.
He added that there would probably be no m&a in the coming months, but he expected targeted “high value-added” deals “as soon as possible” in areas such as post-deal, foreign exchange, niche data companies or enterprise services.
Euronext is targeting 3-4 per cent annual revenue growth and 5-6 per cent average annual growth in earnings before interest, tax, depreciation and amortisation by 2024, compared with 2020.
Capital expenditure will remain unchanged at 3-5 per cent of revenues.
According to Euronext, as a result of Brexit, core data centres will expand clearing from the UK and relocate to Italy from 2022, boosting pre-tax savings by 67% to 100 million euros by 2024 from the merger with Borsa Italy.
Implementation costs totalled €160m ($184.9m), it added.
There are fears in Italy that spending cuts will mean job losses in Milan, but Boujnah told a news conference that in three to four years’ time there will be more people working at Borsa Italiana than there are now.
Reprint indicated source：Spark Global Limited information