Euronext is a pan-European exchange group with regulated markets in Amsterdam, Brussels, Dublin, Lisbon, Oslo, and Paris. In this guide, you’ll learn more about Euronext’s products, services, and how it operates.
Contents
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’s business offering include the following:
| Service | Description |
|---|---|
| Listings | Euronext operates a marketplace for the public listing of equities, bonds, ETFs, funds, indices, warrants and certificates, and structured notes. It also helps companies manage their listings. |
| Trading | Euronext operates marketplaces for trading nine different classes of assets:
|
| Services | Euronext develops and offers a variety of trading-related services, including:
|
| Market Data | Euronext offers real-time, historical, reference, and end-of-day index data for assets traded on its platforms |
| Technology | Euronext develops and licenses technology such as the new Optiq multi-market trading platform |
What Can You Trade on Euronext?
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
| Category | Sub-category | Market Facts |
|---|---|---|
| Cash/Spot | Shares / Equities | |
Fixed Income:
| Traders in this segment can access: | |
| Funds: | ||
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 |
Trading Commodities
Looking to trade commodities like those on Euronext? Read our reviews of regulated commodity brokers available to traders in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
How is Euronext Regulated?
Euronext’s markets in Amsterdam, Brussels, Lisbon, London, Dublin, Oslo, 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.
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, while commodity contracts are subject to position limits.
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, Euronext Dublin, 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
- Global Exchange Market operated by Euronext Dublin
- Atlantic Securities Market operated by Euronext Dublin
- MTFs operated by Oslo BØrs ASA
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.
How Does Euronext Conduct Trading?
Euronext conducts trading on several electronic communication networks (ECNs).
Optiq
Optiq is the latest generation multi-asset electronic trading platform offered by Euronext. It replaced the Universal Trading Platform (UTP) for the 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
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
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.
Euronext Block
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.
ETF MTF
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.
AtomX
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.
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).
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.
In order to stabilize the new public company, a group of 11 investment took a stake in Euronext. These investors, called reference shareholders, own a 33.36% stake in Euronext.
Key Events in Euronext’s History
| Event | Subject | Year | Commentary |
|---|---|---|---|
| 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. |
FAQs
Below, we’ve put together some answers to commonly asked questions about Euronext.
What Type of Memberships Does Euronext Offer?
Qualifying firms may apply to become a member of the Euronext Cash Market or the Euronext Derivatives Market or both
All applicants 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.
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.
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
Market Makers
Euronext has a variety of market-making schemes.
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.
What Are Euronext’s 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 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.
Traders should consult the LCH and EuroCCP websites for more details about how they calculate margin.
What Are Euronext’s 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.
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 investors in each country in which it operates. These sites provide educational materials and publications to help inform investors about the exchange and its products.
You can find the links to these sites in the investors’ section of their website.
Does Euronext Have Vendor Partners?
Euronext works with many independent software and application service providers that help traders connect to the exchange’s technology and systems.
Actant, ATEO, BLOOMBERG, Digit Base, Eccoware, and TradeSense count among these providers, but you’ll find a full accredited list on their website.
Further Reading
- Learn more about the world’s largest commodity exchanges including the Intercontinental Exchange (ICE), the Zhengzhou Commodity Exchange (ZCE), the Tokyo Commodity Exchange, and the Brasil Bolsa Balcão.
- If you’d like a primer on how to trade commodities in general, please see our introduction to commodity trading.
