Listen: The Daniel Bouton interview
What does the link-up between Euronext and the New York Stock Exchange mean for markets in Europe?
First I should mention that Société Générale is the leading client of Euronext. We have an 8% market share of European Euronext transactions and a 10% market share of Paris Euronext transactions. So we are extremely interested in the future of Euronext.
Second, we are the leading employer in corporate and investment banking in Paris, which means that we are also very concerned by the future of Paris as a financial centre. We support the idea of the Euronext/NYSE combination – indeed we became an adviser to NYSE on the transaction. It has the best potential for Euronext as well as the future of Paris as a financial centre.
What about as a user of the exchanges?
For a user, competitiveness is a key element. The marketplace needs liquidity, choice, efficiency and incentive for innovation. And we consider the NYSE/Euronext combination to be a very good answer to those challenges. It will create by far the biggest marketplace in the world.
The synergies between the two parties will be high. Liquidity, the key factor, will rise by around 20%. On top of that you have integration and cost savings, which in IT alone are estimated at about one-third of the total cost. These cost savings will be shared between shareholders and users via fee reductions.
What’s also important is that this is a transcontinental consolidation. The combined entity will be able to compete globally for new listings coming from the Bric countries [Brazil, Russia, India and China]. As well, many small and mid-sized US companies that are put off a local listing by Sarbanes-Oxley will have the possibility to be listed on the European platform.
There will be a very solid ringfence between the Euronext regulation and the US regulations.
A final point: we like competition as a user. It’s positive to have a strong London Stock Exchange, a very good Deutsche Börse. This competition will help ensure that we, the user, benefit from the best possible prices, which will in turn benefit our shareholders and customers.
Some people argue that stocks may move away from exchanges to different platforms, especially given Mifid...
This is a question that has been raised many times over the past 25 years. Liquidity naturally goes to the most efficient, lowest-cost market. There have been numerous attempts during the past two decades to develop electronic marketplaces. I wish them luck, because competing against a marketplace like Euronext/NYSE will be very interesting.
Listen: The Daniel Bouton interview