Euronext does not see outages as barrier to Borsa Italiana deal

Stephane Boujnah, CEO, Euronext.

Euronext has denied that a series of technical failures last month that halted trading on the exchange will hinder the group’s chances of securing regulatory approval to buy Borsa Italiana for €4.3 bn from the London Stock Exchange next year.

Speaking to journalists after the release of the company’s third-quarter results, CEO Stephane Boujnah said he has had “extensive conversations with regulators and it has been put in perspective”.

“The unfortunate incident has been discussed with the relevant stakeholders but doesn’t challenge the need or the model to create the backbone of Europe’s market infrastructure,” he added.

A series of glitches disrupted trading on Euronext on 19 October for three hours and ended with the abandonment of the crucial end-of-day auction. Only Oslo Bors, which runs on a different technology system, escaped unscathed.

There was another incident on Monday, 2 November further prompting concerns about the risks of one operator responsible for so many platforms.

Euronext runs the main exchanges in Paris, Amsterdam, Brussels, Dublin and Lisbon as well as has a majority stake in Oslo Bors. Once the Milan bourse is added in the first quarter 2021, pending regulatory approval, Euronext would account for roughly a quarter of all equities trading in Europe.

This has prompted industry group Association for Financial Markets in Europe (AFME) to voice its concern about the unnecessary risks posed to the markets by this stronghold.

Boujnah defended the integrated platform approach, saying it is in line with the plans for a Capital Markets Union in the European Union.

“Euronext has invested heavily in technology, capacity, latency and processes,” he added. “This has allowed us to deliver a platform which is cutting-edge that has been extremely stable and resilient since it was released.”

He added that the “platform did an amazing job during the peak of volatilities and volumes in March, April and May. And we believe that it is the backbone of the Euronext project, which is all about building a single liquidity pool, enabled by a single order book, empowered by a single technology platform.”

Euronext reported third quarter revenues of €204.8m, up 12.7% from the same quarter in 2019. Net income rose 10.6% to €70.2 m.  The group continued to diversify earnings with non-volume related revenues currently at 54% of the total compared to 52% last year.

©BestExecution 2020

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