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Euronext CEO Stéphane Boujnah discusses markets during war time and platform consolidation in Europe | John Lothian News

Euronext CEO Stéphane Boujnah discusses markets during war time and platform consolidation in Europe

John Lothian

John Lothian

Executive Chairman and CEO

2021 was a watershed year for Euronext with its acquisition of Borsa Italiana. “It was a transaction that changed the scale of Euronext,” said Stéphane Boujnah, CEO and chairman of Euronext’s managing board. Boujnah spoke with John Lothian News at the FIA Boca 2022 conference about the impact of the Ukraine War on European markets and what’s in the future for the platform that bills itself as the “One unique marketplace connecting seven European economies.”   

The Borsa Italiana acquisition follows the successful acquisition of the Irish Stock Exchange in 2018 and of Oslo Bors in 2019. “The voyage in terms of transformation … has been really amazing,” Boujnah said. “Euronext now operates 25% of the trading shares in Europe. We are the largest [exchange platform] in Europe. We are developing a very aggressive trading strategy to beat the other players in Europe.” The future of the marketplace is totally changed by the Borsa Italiana transaction, he said. “What we have to do now is to deliver the percentages that we have announced. It’s well on track.” 

Russia’s war in Ukraine is an unprecedented crisis to the rest of the world, but for Euronext it is an event happening at home. “The events in Ukraine are taking place a (few thousand) kilometers away from Paris and Brussels,” Boujnah said. “Just to give you an order of magnitude – you are sitting here in Florida and it is similar to a war happening in Dallas. So it’s very close.” 

The immediate consequence for Euronext is volume volatility and a significant increase in volumes in terms of shares but also in terms of derivative products on the wheat market.  

The wheat market in Europe exists in two large dimensions. “[These are] Western Europe with France, and to a certain extent Germany, and the other part being Black Sea with Russia and Ukraine,” Boujnah said.  “Black Sea is closed for the moment and therefore is having a significant impact on volatility and volumes.” 

“The ambivalent paradox is that, yes, Russia is a small economy,” Boujnah said. “It’s comparable  to the GDP of Spain; it’s slightly more than Spain but less than Italy. It’s only 1% of international exports. But Russia is the largest producer of oil and gas, and that has a direct impact on some European economies.” 

Boujnah is concerned about the impact of the European and Western sanctions on  supply chains in selective sectors, which could potentially cause recession in selected industries.

Other challenges for Euronext during this time of crisis are cyber security and finding its place in the cryptocurrency market. “We spend a lot of time, energy and resources making sure that all platforms are as waterproof as possible,” Boujnah said. “We operate with the assumption that we might face in the coming months cyber attacks.”

In addition, Euronext, like all exchanges, is looking to position itself as a relevant platform in the crypto world. Two approaches seem to be cited frequently, Boujnah said. “One is to say,  ‘it doesn’t exist. It’s not for us.’” The other way is to follow the crowd, act like a venture capitalist and take the technology bet. 

“It’s more complicated for the incumbents than for the newcomers,” he said. “For the moment, we’ve developed a strategy to offer indirect exposure to clients… but we are exploring very particular niches where we believe we can be relevant with what is organic –  which is a regulated, transparent, institutionally focused platform.”

 Euronext is a leader in human rights and green technology and will continue to make those initiatives a priority in the future, Boujnah said.

“We are moving to a totally clean green data center,” he said. “It’s a major breakthrough in terms of carbon footprint, and that’s very, very relevant.  That will be the first milestone of the Italy markets integration,” he said. Euronext will also continue launching ESG-related indices. “ESG migrations, data center migration, trading engine migration, [and] the move to accelerate the derivatives strategies are going to define 2022.” 

 “After the failure of the attempted merger between LSE and Deutsche Börse there was an urban legend stating that since (they) could not merge, that merging market infrastructure in Europe is impossible,” Boujnah said. “Maybe. Maybe not.” After a series of successful acquisitions, Euronext understands the principles that bring success, he added. 

“There are ways to do consolidation in Europe,” Boujnah said.  “You just have to make it in a respectful manner for the local ecosystem and local identities, because local ecosystems have a special relationship with their market infrastructure – in particular, the exchange part of the local market.”

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