Over the past few years, Euronext has radically transformed, expanding its value offering for the market. This year, the European exchange celebrates ten years since its 2014 IPO when it span off from the ICE-NYSE merger.
A decade on, Euronext is a very different beast to the business that stepped away from ICE. Now a major market infrastructure for Europe, it covers listing and trading, operates a network of four European CSDs, its own clearing house, Euronext Clearing, and has diversified into new asset classes such as FX and power trading.
Running robust primary markets
Maintaining a high-quality and vibrant IPO venue has always been at the core of Euronext’s business. Today, Euronext manages the primary markets for seven European countries: Belgium, France, Ireland, Italy, the Netherlands, Norway and Portugal. It is the leading equity listing venue in Europe, with a diverse range of equities listed on its market, including tech stocks, international listings such as Spain’s Ferrovial, the US’s Coty Inc and Brazil’s Seacrest Petroleo in 2023, and recent success stories such as Planisware and CWC. A recent Euronext study also debunked common misconceptions of the US listing market, showing that European companies listed on Euronext display better or equivalent performance to those listed in the US, especially stronger after-market performance, comparable liquidity and higher valuations.
Gateway to European trading
With its seven marketplaces, Euronext is the gateway for global investors to trade European listed securities. Euronext markets’ diverse member base, by both geography and trading profile, makes for a particularly rich and diversified order book. European markets are also a strong contender in terms of liquidity: for example, the ADV of a Large-Cap company is €116m in Europe compared to €146m in the US, proving that the liquidity gap between Europe and US is narrower when comparing similar-size companies, and reaffirming the attractiveness of European markets.
Market quality and innovation
Euronext’s innovative federal model gives members access to its single liquidity pool, the largest in Europe for lit volumes. This means excellent market quality and reduced fragmentation for investors. The Exchange continuously improves its offer to match its clients’ needs. Earlier this year, Euronext launched Euronext Mid-Point Match, its dark, mid-point and sweep functionalities, which interact with the Euronext Central Order Book at zero latency, allowing investors to source liquidity in both dark and lit trading pools. While Euronext will always remain primarily a lit and transparent exchange, enabling price formation and helping fund the real economy through its primary markets, these new trading functionalities are crucial in continuing to provide the best liquidity possible to Euronext’s trading members.
Best execution for retail investors
Euronext also has a thriving and growing retail segment, encouraging retail investment in a safe, regulated and supervised environment. Its Best of Book service allows retail investors to trade on the liquid Euronext Central Order Book, supported by a pool of liquidity providers dedicated to retail orders. The service will soon be extended to include ETFs.
Retail investors can also invest in global household names via the Euronext Global Equity Market (GEM Equity), which now offers trading in Euros in major US stocks. Trading in these stocks and the 200 most liquid Euronext stocks is also available outside standard trading hours on the Trading After Hours (TAH) market.
Scaling new derivatives market peaks
One of the pioneers of daily options back in 2008 with its flagship Dutch AEX index, Euronext has now launched dailies on the French benchmark, the CAC 40. Investors can now choose from daily, weekly or monthly expiries to manage their exposure.
The recently launched Derivatives Trader GUI offers easier access to the Euronext derivatives franchise. This powerful tool includes a built-in TRF pricer for the popular CAC 40 Total Return Future.
The derivatives offering is also set to benefit from the expansion of multi-asset CCP Euronext Clearing, already in place for Euronext cash markets and set to clear derivatives later this year. Regaining control of clearing across its markets will allow Euronext to innovate more freely, with greater agility to create derivatives products and expand its range in response to client demand. The CCP will provide a unified clearing framework across the Euronext markets, with a dynamic VaR-based margin methodology. Options on new underlyings, a new cash-settled futures contract on salmon, and a new TRF are in the pipeline.
Harmonised clearing will also allow market participants to benefit from a unified equity and derivatives default fund facilitating cross-margining, empowering them to optimise their trading activities.
Limitless index creation capabilities
As a leading index provider in Europe, Euronext’s index business has a strong track record of innovation and quick execution times, offering qualitative and research-enhanced solutions. It designs, calculates and publishes over 1,000 indices, including the major national indices for Euronext’s European markets, and over 100 ESG indices. Euronext indices are licensed by major issuers of financial products, and have over 15,000 associated ETFs, funds, warrants, certificates, futures and options.
As demand grows for investment solutions that cover ESG, climate, thematic, alternative energy, healthcare and other trends, recent additions to the Euronext index franchise include the SBT 1.5 indices, the Biodiversity Enablers World index, cryptocurrency indices, and thematic indices such as the European Space index and the AI World index.
Entering the rates space
Euronext’s most recent diversification was the acquisition of Global Rate Set Systems, service provider to the benchmark administrators that produce three of Europe’s key interest rate benchmarks, EURIBOR®, STIBOR® and NIBOR®, among others. The acquisition will broaden Euronext’s index offering to interest rate benchmark indices and contributed data indices.
An exchange climbing to new heights
In recent years, Euronext has transformed from an exchange into a market infrastructure. The Group’s CEO, Stéphane Boujnah, is a key proponent of European Capital Markets Union, and believes that the Group’s model is best suited to contribute to the construction of a true European market. This November, he will announce Euronext’s new strategic plan, outlining its vision to 2027, and how the Exchange will continue to push boundaries to help shape capital markets for future generations.
