Strategic shift at NYSE Euronext

The transatlantic exchange operator NYSE Euronext is preparing to change the model. He announced the creation of its own clearing houses in Paris and London, and end at the end of 2012, its trade relations with its current service provider LCH Clearnet on the two financial centers.

This decision represents a reversal. In 2007, when Euronext was to choose a partner from the U.S. NYSE and German Deutsche Borse, the group preferred the former because it does not recognize himself in the vertical integration model of the second. The trade of the stock market is indeed a value chain in three stages: the "place" where exchange transactions are carried out, the clearinghouse that records and transactions settlement. Euronext is an operator to date, business-focused transactions.In developing its own clearing houses, goes up the value chain.

This shift fits by NYSE Euronext in the times of political and strategic place in Paris where it argues for the existence of localized market infrastructures in the euro zone. However, compensation is dominated by LCH Clearnet and by great American actors as DTCC. This business is also known to have an increasing role in securing the derivatives market: everywhere regulators are considering forcing a maximum of derivative transactions to go through clearing houses, thereby reducing the counterparty risk of potential systemic transactions.

Another reason, however, pushes NYSE Euronext to expand its field of activity.While its historical business transaction is fierce price competition from entering the competition at alternative platforms in Europe, the conditions are much less harsh on the job of clearing. In short, the incumbent, shaken by the loss of its monopoly, will seek margins where they still exist …

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