What is Euronext?
Euronext is a European marketplace for trading shares, fixed income, derivatives, commodities, ETFs and other financial products.
Euronext also assists companies with raising equity and debt capital, listing their securities and managing their exchange listings.
It operates the leading marketplaces for European trading in virtually every major asset class. The exchange plays a vital role in providing liquidity in the European marketplace.
Euronext operates the following business segments:
|Listings||Euronext operates a marketplace for the public listing of debt and equity securities. It also helps companies manage their listings.|
|Trading||Euronext operates marketplaces for trading nine different classes of assets:|
|Products||Euronext develops and offers trading products that augment the trading experience:|
|Market Data||Euronext offers real-time, historical and reference data for assets traded on its platforms|
|Technology||Euronext develops and licenses technology such as the new Optiq multi-market trading platform|
History of Euronext
The birth of Euronext occurred in September 2000 when three European bourses – Amsterdam Exchanges, Brussels Exchanges and Paris Bourse – merged into one entity. The merger enabled the parties to take advantage of the financial harmonization in Europe created by the formation of the European Union (EU).
In all three cities, Euronext managed both securities and derivatives markets. Although some skeptics believed the new exchange would jeopardize the national character and financing function of each of the member nations, proponents of the merger saw reasons for optimism. The creation of the euro currency and the increasing global and electronic presence in securities trading made the new exchange a logical next step for financial markets.
Key Events in the History of Euronext
|Acquisition||London International Financial Futures and Options Exchange (Liffe)||2001||Expanded Euronext presence into the United Kingdom|
|Acquisition||Lisbon Stock Exchange||2002||Expansion of Euronext into the leading marketplace in Portugal|
|Merger||New York Stock Exchange (NYSE)||2006||In an effort to prevent a takeover by NASDAQ, NYSE enters into a $10 billion merger agreement with Euronext. The merger was completed on April 4, 2007|
|Technology Development||NYSE Euronext develops the Universal Trading Platform (UTP)||2008-2009||The new electronic platform provides for trading of equities, bonds, options and futures|
|Product Launch||Euronext London||2010||London-based securities market targeting new international issuers|
|Attempted Merger||Deutsche Börse Group||2011|
|Acquisition||Intercontinental Exchange (ICE)||2013||ICE, a global operator of trading marketplaces and clearing houses, acquired NYSE Euronext for $8.2 billion|
|Divestment||Euronext||2014||ICE separated the continental European operations of NYSE Euronext and Euronext London from the rest of the company and launched a public offering of Euronext N.V.|
ICE kept NYSE and Liffe and maintained them as separate entities.
In order to stabilize the new public company, a group of 11 investment firms took a stake in Euronext. These traders, called reference shareholders, own a 33.36% stake in Euronext.
The investment consortium – consisting of Euroclear, BNP Paribas, BNP Paribas Fortis, Société Générale, Caisse des Dépôts, BPI France, ABN Amro, ASR, Banco Espirito Santo, Banco BPI and Belgian holding public company SFPI – agreed to maintain a three-year lockup period.
Who Are the Euronext Executives?
The Managing Board of Euronext consists of six individuals who oversee the management of the daily operations of the exchange group.
Managing Board of Euronext
|Stéphane Boujnah||Chief Executive Officer||Boujnah is both CEO and Chairman of the Managing Board.|
Prior to joining Euronext, he was Head of Santander Global Banking and Markets for continental Europe.
Previous roles include:
|Lee Hodgkinson |
|Anthony Attia |
|Paulo Rodrigues da Silva|
CEO of Interbolsa
Member of the Managing Board of Euronext N.V.
|Maurice van Tilburg|
Member of the Managing Board of Euronext
|Vincent Van Dessel||CEO of Euronext Brussels||Van Dessel has been in his current role since 2009. His previous roles include:|
Images sourced from – https://www.euronext.com/en/traders/corporate-governance/managing-board
How is Euronext Regulated?
Euronext’s five securities markets – Amsterdam, Brussels, Lisbon, London and Paris – and four derivatives markets – Amsterdam, Brussels, Lisbon and Paris – fall under the regulated markets framework of the Markets in Financial Instruments Directive II (MiFID II) of the European Union.
The Markets in Financial Instruments Directive (MiFID) is an EU regulation designed to increase transparency across all member nations. The regulation was passed in 2004 and implemented in 2007.
MiFID harmonizes securities laws across the 28 EU member states as well as Iceland, Liechtenstein and Norway. MiFID incorporates the concept of a passport, which means that firms that have regulatory approval to operate in one EU state can offer their services in the others as well.
As a result of the 2008 global financial crisis, the EU made MiFID more expansive and created MiFID II and Markets in Financial Instruments Regulation (MiFIR). These changes went into effect in 2018. MiFID II made the reporting requirements of derivative contracts more stringent. Commodity contracts are subject to position limits under MiFID II and more onerous reporting requirement.
Euronext regulated markets are governed by harmonized and non-harmonized Rule Books that the various Euronext exchanges implement and interpret through Notices.
In addition to regulated markets, Euronext also operates Multilateral Trading Facilities (MTFs). Each of these MTFs has its own organizational memos and rules:
- Euronext Growth operated by Euronext Brussels, Euronext Lisbon and Euronext Paris
- Euronext Access operated by Euronext Brussels, Euronext Lisbon and Euronext Paris
- Euronext Expert Market operated by Euronext Brussels
- Trading Facility operated by Euronext Brussels
- Euronext Synapse operated by Euronext London
- Euronext Block operated by Euronext London
You can find the rules for each of these entities at the regulation section of the website.
Euronext Market Undertakings is an entity that is licensed by the relevant regulators as defined by MiFID II.
The European Securities and Markets Authority (ESMA) maintains the list of Regulated Markets. As European market operators, all Euronext markets are subject to the national laws and regulations in force as well as EU regulations.
You can find additional information about regulation in the company’s annual registration documents.
What Products Does Euronext Trade?
Euronext traders can transact business in one of two broad categories of products:
- Cash / Spot market: Transactions in which delivery and payment take place shortly after the transaction is concluded
- Derivatives: Securities that derive their value from the performance of another instrument such as an asset, index or interest rate. Futures and options are the most commonly traded derivatives
Products Traded on Euronext
|Cash/Spot||Shares / Equities|
|Fixed Income:||Traders in this segment can access:|
|Exchange Traded Products:||One of the fastest growing investment categories in the world|
|Warrants and Certificates: A pre-packaged investment strategy based on derivatives including:|
Indices: Euronext has launched Morningstar European Indices and associated instruments. It has also offered to make available benchmark indices and create derivative products based on those indices.
|Parties can license these indices and create ETFs, ETPs and structured products for low cost|
|Derivatives||Equity Derivatives:||Provide a leveraged way to invest in equity and equity-linked products|
|FX Derivatives: Euronext offers five FX derivatives:|
|Commodities:||Products allow traders to manage agricultural price volatility|
How Does Euronext Conduct Trading?
Euronext conducts trading on several electronic communication networks (ECNs).
Optiq is the latest generation multi-asset electronic trading platform offered by Euronext. It replaced the Universal Trading Platform (UTP) for trading of most asset classes at Euronext.
Optiq provides traders with a streamlined and fast way to send orders for execution. It can accommodate connections with approved Independent Software Vendors (ISVs) (see below) and is compliant with MiFID II.
Euronext offers other targeted platforms for trading in specific asset classes or market situations:
FastMatch FX is the fastest growing ECN in the spot FX market. The credit crisis of 2008 has led to an evolution toward greater transparency in the FX market and an increase in electronic trading.
FastMatch FX provides customers with access to large pools of liquidity in FX markets. The ECN has the following features:
- Colocation in four data centers: London, New York, Tokyo and Greenwich
- 10 times lower latency compared to most competitors’ ECNs
- Smart order routing
- Customizable liquidity pools
Euronext Synapse was developed in partnership with Algomi to serve customers transacting in illiquid fixed income markets.
The service brings together banks and customers and provides liquidity, execution and reporting features in one platform. Euronext developed Euronext Synapse to increase trading opportunities in sparsely traded bonds.
Euronext Synapse efficiently searches for counterparties and brings together pools of liquidity for bond traders.
This multilateral trading facility (MTF) allows market participants to proactively trade large blocks of securities.
The platform has a feature called Euronext Block’s Invitation to Trade (ITT), which allows traders to invite trusted counterparties to submit block liquidity.
Traders can use Euronext Block to transact in 3,000 instruments across 15 markets.
This is a single Pan-European platform for trading all European listed ETFs.
Euronext Expert Market
This is the electronically traded market for selling non-listed securities by public auction. Public auctions take place every Tuesday to trade securities, bonds and other fixed income instruments.
This system allows traders to report customized OTC transactions.
The platform allows reporting of bilateral contracts with customized expiry dates and strike prices. Traders can report European or American style options and physically or cash-settled products. Essentially AtomX gives traders in the OTC market the security and efficiency of an exchange market.
What Type of Memberships Does Euronext Offer?
All applicants to Euronext must complete an application, undergo a due diligence review and sign an agreement affirming that he/she will adhere to all regulations of the exchange. Interested applicants can consult the Euronext Rule Book 1 and Euronext Trading Procedures for more details.
Euronext does not accept memberships from individuals or firms that are unauthorized unless the individual or firm is awaiting authorization pursuant to MiFID or can demonstrate why authorization is not necessary.
Prospective members can choose memberships in the Securities/Cash market, the Derivatives market or both.
The steps for applying for membership are as follows:
- Submit an application and necessary documentation
- Gain connectivity to Euronext markets
- Configure and test connection
- Begin trading
Key Contacts Registration
During the application process, every prospective member firm must identify key contacts. These individuals have special responsibilities and obligations:
- Authorized Representative: Usually a CEO, COO or compliance officer, the authorized representative is responsible for disseminating legal or regulatory information within the firm and identifying the Responsible Person.
- Responsible Person: Euronext will direct all inquiries regarding business conducted on its markets to the Responsible Person. The Responsible Person must ensure that all activities carried out on Euronext exchanges are conducted in accordance with the exchange rules and regulations.
Firms that intend to disseminate two-sided markets on a regular basis, such as high-frequency traders, must register as market makers with the exchange.
Euronext has a variety of market making schemes. Traders can obtain details about these schemes in the market maker section of the website.
What Are Euronext Margin Requirements?
Central counterparties (CCPs) provide protection to market participants by acting as a seller to the buyer on a trade and the buyer to the seller. In this regard, they protect market participants from the risk of default and they allow markets to operate safely and efficiently.
Euronext has relationships with two CCPs:
- LCH and EuroCCP – For cash markets including warrants and certificates
- LCH – For derivatives markets including commodities
These clearinghouses act as central counterparties on all transactions. Each of these clearinghouses employs the necessary procedures to protect market integrity and safeguard market participants from systemic risk.
Each clearinghouse also tries to balance market safeguards with the optimization of capital efficiency.
LCH website notes its use of the SPAN® margining methodology.
SPAN® Margin Model
LCH uses the SPAN® Margin Model to calculate futures and options margin. Traders generally have to post initial margin based on the riskiness of a position and any possible offsets the clearing firm may apply. Sometimes LCH can require additional margin to account for factors such as illiquidity, concentration risk in an asset class or other factors.
What Are the Fees and Charges for Traders?
Euronext charges transaction fees for both cash market and derivatives trades executed on its platforms. It bases the fees it charges traders for executions in its cash markets on two factors:
- The mechanism for trading (e.g., auction or continuous)
- The level of liquidity in the product
The exchange designs its cash fee scheme to charge lower fees for more liquid instruments and to encourage providing liquidity in less liquid securities.
Euronext derivatives traders pay trading fees based on three factors:
- The product
- The type of account
- The role of the member
Euronext does not charge either initial or annual membership fees. However, members receive charges for connecting to the exchange systems and clearing through the exchange partner clearing firms.
You can obtain details on all fees in the documents available at the Fees & Charges section of the website.
What Market Data Does Euronext Offer?
Euronext makes a variety of different types of market data available to its customers.
Real-Time Data: Euronext makes real-time data available either through the exchange or through authorized vendor partners of the exchange. Traders can obtain real-time data for equities, derivatives, indexes and bonds.
Historical Data: Euronext offers historical tick data on all instruments traded on Euronext markets. Traders can use this data to back-test trading strategies, develop risk and execution models and perform post-trade analysis.
Corporate Actions: Corporate action data products such as dividend news, corporate action calendars and contract notices.
Reference Data: Provides detailed information on trading product attributes.
Index Data: Provides current and historical details on index compositions and weightings.
What Educational Materials Does Euronext Offer?
Euronext operates local websites for traders in each country in which it operates. These sites provide educational materials and publications to help inform traders about the exchange and its products. You can find the links to these sites in the traders’ section of the website.
Does Euronext Have Vendor Partners?
Euronext works with many Independent Service Providers (ISVs) that help traders connect to the exchange’s technology and systems:
- Actant Ltd
- BLOOMBERG LP
- Celoxica Limited
- Charm BV
- Communicating Ltd
- Comunytek Consultores
- Cunningham Trading Systems, LLC
- Deriva BV
- Digit Base
- EasyScreen Ltd.
- ELIDATA Srl
- FIS Global (Sungard)
- FMR Computers & Software Ltd.
- GenXs BV
- GX2 Systems
- ION Trading
- Itiviti AB
- JJ Informatica Financiera SL
- List-Group SpA
- ORC Software
- Quod Financial
- Rithmic, LLC
- Riverrun Systems Ltd.
- Rolfe & Nolan
- RTS Realtime Systems Group
- Sol-3 GmbH & Co KG
- Stellar Trading Systems
- Super Derivatives
- Syntel Financial Software
- Teleinvest International AG
- Tick Trading Software AG
- Trading Technologies International, Inc.
- Ullink SAS
- Vela Trading Systems LLC
- Visual Trader
How Can You Get Started Trading?
Many regulated brokerage firms offer contracts for difference (CFDs) based on products traded on Euronext.
CFDs are a derivative instrument that offers retail traders a different way to invest in financial markets. CFDs allow traders to use leverage to bet on the price of financial assets. The value of a CFD is the difference between the price of a financial instrument at the time of its purchase and its current price.
Many regulated brokers worldwide offer CFDs on shares, commodities, indexes, forex and other financial assets. Customers deposit funds with the broker, which serve as margin. The advantage of CFDs is that traders can have exposure to financial assets without having to purchase shares, ETFs, futures or options.
Traders can open an account at one of these regulated brokerage firms and begin trading CFDs based on products traded on Euronext.