Euronext speech

Monday 12 May, 2008

I attended a luncheon sponsored by the National Investor Relations Institute featuring a speaker from NYSE Euronext, the exchange which merged with Archipelago in Chicago, who was speaking on the globalization of financial markets.

Up until 2004 each of the exchanges were essentially single asset classes. The NYSE then changed its strategy to use globalization, diversity asset classes, & leverage technology. In 2006, the NYSE & Archipelago holdings hooked up & went public. In 2007, NYSE merged with Euronext which had 4 exchanges in Europe, to create the 1st “global markets,” & started their asset diversification in derivatives. They trade $141 B daily, which is 1/3 of the cash trade in the world. They own 5% of the Indian exchange (capped by the government), & 1% in Brazil. They have interests in Tokyo, (which is not yet publicly traded), Malaysia, & the Philippines

There is increasing global competition for capital formation. In 1995, 57% of global proceeds were listed in the U.S. That # has dropped to 18% in 2006. In 1999, private placements were $57B. In 2006, that had risen to $137B. Europeans no longer need to access capital in the US. Brazil is getting deeper & more liquid. Of 64 public exchanges worldwide, only 2 are in the US. Growth in derivatives is 30% to $450B dwarfs others. American holdings overseas was in $7.2B in 59 funds 5 years ago to $87B in 217 funds now. Foreign investment is up 90% in the US.

In the future, consolidation into 5-6 groups is inevitable. Regulation is becoming more global & there will be more convergence with consolidation. Europe offers “fast path” listings for US companies which are already listed with SEC documents instead of European listings.

My purpose in attending was to find out what was left of Archipelago in Chicago.  It seems as if only those responsible directly for the Arca Trading Platform.  Everyone else has relocated to New York.


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