NYSE Euronext
NYSE Euronext Inc. is a New York-City-based Euro-American multinational financial services company operating a number of securities exchanges, including the world’s largest stock exchange, the New York Stock Exchange.
Back in March 2006, NYSE completed a merger with Archipelago Holdings. The merger led to the creation of NYSE Group Inc. Then in April 2007, the NYSE Group Inc. completed a merger with Euronext N.V., forming the first global equities exchange.
Overview
A wide range of financial products and services in cash equities, futures, options, exchange-traded products (ETPs), bonds, market data, and commercial technology solutions are offered by NYSE Euronext. NYSE Euronext’s exchanges include the New York Stock Exchange, Liffee, Euronext and NYSE Arca. The total number of listed issues on NYSE Euronext’s equity markets stands at more than 8,000 and represent over one-third of the world’s cash equities volume. In addition, NYSE Euronext also operates Europe’s leading derivatives exchange by volume.
NYSE Euronext’s principal executive office is located at 11 Wall Street, New York, NY 10005. Its European headquarter is in Paris.
Locations
- Amsterdam, Netherlands
- Paris, France
- Lisbon, Portugal
- London, United Kingdom
- Chicago, Illinois, U.S.
- New York City, New York, U.S.
- Palo Alto, California, U.S.
- San Francisco, California, U.S.
- Belfast, Northern Ireland
- Brussels, Belgium
Mergers and Acquisitions
NYSE and Archipelago Holdings
NYSE and Archipelago Holdings merged on March 7, 2006. The merger was first approved in 2005 by a 95% majority of voting NYSE members. Archipelago was the owner of highly regard market technology. The idea behind the merger was to bring automated trading to NYSE markets, which had been using open outcry system. The exchange was looking to improve efficiency by switching to automated trading.
With the merger, the New York Stock Exchange became a for-profit company and started trading publicly under the ticker NYX. The owners of NYSE’s 1,366 seats received 80,177 shares of the new company stock and $300,000 in cash and $70,571 in dividend for each seat they held. On completion of the merger, the NYSE Group had two new branches; NYSE Arca and NYSE Arca Europe.
NYSE Group and Euronext
Following the merger with Archipelago Holdings, in April 2006, the newly formed NYSE Group and Euronext entered into a merger agreement. The agreement required regulatory and shareholder approval.
The deal was approved by Euronext shareholders on December 19, 2006. A day after Euronext shareholders gave their approval, NYSE Group shareholders also approved the transaction, thus making way for the creation of the world’s first global equities exchange.
The transaction was completed on April 4, 2007, creating the present NYSE Euronext.
NYSE Euronext and NYFIX
NYSE Euronext acquired NYFIX through its wholly-owned subsidiary NYSE Technologies. Through the acquisition, NYSE Euronext was able to incorporate NYFIX’s industry leading trading software into its offerings. NYSE Euronext paid $1.675 per share to acquire NYFIX.
In February 2012, NYSE Euronext reached an agreement to subscribe for shares in Fixnetix Limited, which provides services such as ultra-low latency data provision, co-location, trading services and risk controls for over 50 markets globally.
NYSE Euronext began a tender offer to acquire approximately 25% of Fixnetix’s outstanding shares. Under the terms of the agreement, NYSE Euronext has the option to acquire the remaining shares of Fixnetix at any time over the next three years.
The acquisition of Fixnetix complements areas of NYSE Technologies’ product portfolio.
NYSE Euronext announced on May 24, 2012 that it signed an agreement to acquire Corpedia Corporation, which provides ethics and compliance e-learning and consultative services. The acquisition would further expand New York Stock Exchange’s extensive range of worldwide services available to its issuer community.
Corpedia provides services to over 500 customers across all industry sectors, including a number of Fortune 500 companies.
Derivatives
NYSE Euronext’s derivatives segment focuses on derivatives trading and clearing businesses. The segment includes NYSE Liffe, NYSE Liffe Clearing, NYSE Liffe U.S., NYSE Amex Options, NYSE Arca Option and related derivatives market data.
NYSE Liffe
NYSE Liffe consists of the derivatives market run by LIFFE Administration and Management, Euronext Amsterdam, Euronext Brussels, Euronext Lisbon, and Euronext Paris. NYSE Liffe is considered one of the world’s most technologically derivatives trading platforms. It offers a wide range of products on any derivatives market.
The exchange provides customers access to a variety of interest-rate, equity, index, commodity and currency derivative products via a single electronic trading platform, which has been created to handle substantial order flows and transaction volumes.
In addition, the exchange gives access to the Bclear and Cscreen services, which serve as a bridge between the listed and the over-the-counter (OTC) markets. Through these services, the exchange offers a convenient and cost-effective way to register and process wholesale derivatives trades through NYSE Liffe to clearing at NYSE Liffe Clearing.
NYSE Liffe U.S. offers access to trading in full-and mini-sized gold and silver futures, options on full-sized gold and silver futures and futures on Morgan Stanley Capital International (MSCI) Indices. Six external investors, which include Citadel Securities, DRW Investments, Getco, Goldman Sachs, Morgan Stanley and UBS, hold a significant minority equity stake in NYSE Liffe U.S. The day-to-day operations of the exchange are overseen by NYSE Euronext, which continues to be the largest shareholder in the exchange and consolidates its financial reporting. The exchange is operated under the supervision of separate board of directors.
NYSE Amex Options
The NYSE Amex Options employs a mix model that combines auction-based and electronic trading capabilities in order to offer a stable, liquid and less volatile market.
Back in 2010, NYSE Euronext sold a substantial equity interest in NYSE Amex options to seven external investors, which included Bank of America Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD Ameritrade and UBS. However, NYSE Euronext continues to be the largest shareholder in NYSE Amex Options.
NYSE Arca Options
NYSE Arca Options is NYSE Euronext’s other options exchange, offering immediate, cost effective order execution in almost 2000 options issues. The exchange employs a technology platform and market structure that has been created to improve the speed and quality of trade execution.
Cash Trading and Listings
NYSE Euronext’s Cash Trading and Listings segment consists of the New York Stock Exchange, Euronext, NYSE Amex, NYSE Arca, NYSE Alternext, NYSE Arca Europe, SmartPool, BlueNext, and NYSE Blue. It also includes related cash trading market data.
New York Stock Exchange
The New York Stock Exchange, more often called as NYSE, is by far the world’s biggest stock exchange in terms of the market capitalization. As of December 31, 2011, the combined market capitalization of all listed companies in NYSE stood at US$14.242 trillion.
The NYSE is located at 11 Wall Street, Lower Manhattan, New York City, New York, in the United States. In 2008, average daily trade transactions were estimated at US$153 billion.
The New York Stock Exchange (sometimes also called as “the Big Board”) provides a platform for buyers and sellers to trade shares of stock in companies registered for public trading. The NYSE operates from Monday to Friday from 9:30 am – 4:00 pm Eastern, with the exception of holidays declared by the Exchange in advance.
On the trading floor, the NYSE trades in a nonstop auction system, where traders can carry out stock transactions on behalf of investors. They will congregate around the suitable post where a specialist broker, who is employed by an NYSE member firm (that is, he/she is not an employee of the New York Stock Exchange), acts as an auctioneer in an open outcry auction market set up t to bring buyers and sellers together and to administer the actual auction.
At times, they do (approximately 10% of the time) facilitate the trades by committing their own capital and normally spread information to the crowd that helps to bring buyers and sellers together. The auction process was automated in 1995 which brought the use of wireless hand held computers (HHC). The system made it possible for traders to receive and execute orders electronically via wireless transmission. On September 25, 1995, NYSE member Michael Einersen, who had designed and planned this automated system, executed the trade involving 1000 shares of IBM through this HHC, thus ending a 203 year procedure of paper transactions and ushering in an era of automated trading.
At present, all NYSE stocks can be traded via its electronic Hybrid Market (except for those stocks that are highly priced). Customers can now give orders for on the spot electronic execution or route orders to the floor for trade in the auction market. In the initial three months of 2007, more than 82% of all order volume was sent to the floor electronically. NYSE closely works with US regulators like the Securities and Exchange Commission (SEC) and CFTC to manage risks involved in the electronic trading environment through the adopting mechanisms like circuit breakers and liquidity replenishment points.
Exxon Mobil Corporation, the world’s second largest company in terms of market capitalization, is listed on the New York Stock Exchange.
Euronext
Euronext combines the stock exchanges of Amsterdam, Brussels, Lisbon, London, and Paris into a single market. Issuers are required to meet European Union regulatory standards in order to qualify for listing on the regulated markets operated by Euronext. A wide range of securities, which include domestic and international equity securities, convertible bonds, warrants, tickers and debt securities, are listed on the Euronext.
In addition to trading in equities, and derivatives markets, Euronext offers clearing, and information services. Euronext was created in September 22nd, 2000 following a merger between the Amsterdam Stock Exchange, Brussels Stock Exchange and Paris Bourse. The exchanges decided to merge to capitalize on the harmonization of the European Union financial markets.
Following the merger, Euronext acquired the shares of London International Financial Futures and Options Exchange (LIFFE) in December 2001.
In 2002, Euronext expanded by merging with the Portuguese stock exchange Bolsa de Valores de Lisboa e Porto (BVLP). BVLP was renamed as Euronext Lisbon.
NYSE Amex
On October 1, 2008, NYSE Euronext acquired Amex (American Stock Exchange), extending its leadership in U.S. option, cash equities and exchange traded funds.
Amex was called the New York Curb Exchange until the early 1950s. NYSE Euronext announced the acquisition of Amex on January 17, 2008 for $260 million in stock. The acquisition was completed on October 1, 2008.
Following the merger, the Amex equities business was called “NYSE Alternext US.” The exchange was rebranded as NYSE Amex Equities. Trading activity on the exchange is carried out between 9.30 AM and 4 PM EST on all days of the week, except Saturdays, Sundays and holidays declared by the exchange in advance.
NYSE Alternext
NYSE Alternext was formed by NYSE Euronext to meet the requirements of small-and mid-sized companies looking for convenient access to the stock market. The simplified listing requirements and trading rules on NYSE Alternext allow small- and mid-sized companies to access the stock market. The exchange’s rules also ensure transparency for investors.
NYSE Arca Europe
NYSE Arca Europe expands the trading capacity of Euronext’s regulated markets by including blue-chip stocks from 14 European countries; Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Norway, Spain, Sweden, Switzerland, and U.K. It is a pan-European Multilateral Trading Facility (MTF).
SmartPool
SmartPool Trading Limited supplies a MTF, which has been approved by U.K.’s Financial Services Authority (FSA). SmartPool Trading is registered in the U.K.
It offers customers an exchange-led dark pool for the completion of block orders spanning 15 European markets. It also offers a complete central counter party back-end solution through LCH Clearnet and EuroCCP. It was formed through a partnership between NYSE Euronext and BNP Paribas, HSBC, and JP Morgan.
BlueNext and NYSE Blue
NYSE Euronext has a 60% stake in BlueNext. The remaining stake is held by CDC Climat. BlueNext is the operator of a spot market in carbon dioxide emission allowances and credits. It is recognized as a European leader in the field.
BlueNext is looking to create a leading position in trading in environment-related instruments. It has also introduced a futures market that makes physical delivery of allowances and credits.
Back in September 2010, NYSE Euronext announced its intentions to form NYSE Blue, a global company that would focus on environmental and sustainable energy markets. NYSE Euronext acquired a majority stake in NYSE Blue in exchange for some its stake in BlueNext. The transaction was completed on February 18, 2011.
Information Services and Technology Solutions
NYSE Euronext’s Information Services and Technology Solutions segment focuses on commercial technology transactions, data, and infrastructure business.
NYSE Technologies
NYSE Technologies is the commercial technology arm of NYSE Euronext. It was launched back in January, 2009, and offers data, and infrastructure services, complete transaction and managed solutions for market participants, including buy-side, sell-side and exchange communities.
NYSE Technologies has five different business segments, which include Global Market Data, Trading Solutions, Exchange Solutions, Global Connectivity and Transactions.
The Global Market Data segment provides a wide range of global market information products spanning multiple asset classes.
Trading Solutions enables the creation and implementation of high performance, end-to-end messaging software, real-time market data distribution and integration products.
Exchange Solutions offers services such as multi-exchange platform, managed and expert consultancy.
Global Connectivity provides a reliable financial transaction network that connects firms and exchanges globally.
Transactions segment includes the former NYFIX FIX business.
Marche Libre
Marche Liber or the Free Markets of Brussels and Paris not regulated as per European Union Directive. Organized by NYSE Euronext, the Free Markets offer simpler and cost-effective listing. They offer a channel for circulating buy and sell orders. Trades are executed by NYSE Euronexy member firms. The Free Markets provide services to companies that are too small to be listed on one of NYSE Euronext’s regulated markets.
NYSE Regulation and FINRA
Back in May 4, 2010, NYSE Euronext, along with the Financial Industry Regulatory Authority (FINRA), announced that FINRA will be in charge of performing the market surveillance and enforcement functions, which were originally conduced by NYSE Regulation. The agreement was reviewed by the SEC and completed in June 2010.
As per the agreement, FINRA is now responsible for regulatory functions of NYSE Euronext’s U.S. equities and options markets, including the New York Stock Exchange, NYSE Arca and NYSE Amex.
Global Marketing and Branding
NYSE Euronext has a Global Marketing and Branding Department that conducts active marketing campaigns for the company’s own brand as well as for listed firms. The department is in charge of NYSE Euronext’s brand marketing, which includes advertising, marketing communications, event management and market research.
NYSE Euronext has established a number of strategic resources to support its listed companies’ growth initiatives, through the NYSE Global Partnership Program. The idea behind the program is to help listed companies to reach wider audiences.
Events
NYSE Euronext’s Events department is in charge of coordinating bell ceremonies, receptions, conferences and street events.
Opening and Closing Ceremonies
The opening and closing ceremonies hosted by the NYSE have a long history. The ceremonies have been hosted by the exchange since 1903.
Companies see the chance to ring the bell at the NYSE as an honor. The bell ringing trading has even been started in Paris, Brussels, and Lisbon.
Experience Square
The Broad Street area in front of the New York Stock Exchange is called the Experience Square. The Experience Square is used by listed companies to conduct marketing activities.
NYSE Magazine
NYSE Euronext publishes the NYSE Magazine. The quarterly publication offers information on the world’s major companies, and gives readers a close-up look at business leaders who are part of the Exchange community.
The magazine caters to sophisticated audience of CEOs and senior global executives. Each issue of the magazine on focuses on what makes companies succeed. The idea behind the magazine is to create a sense of community among NYSE’s key participants. The magazine has become a strategic tools for business leaders.
NYSE Euronext and Deutsche Boerse
News of a merger between NYSE Euronext and Deutsche Boerse first surfaced inn 2011 when Bloomberg reported that the German exchange operator was in discussions to acquire NYSE Euronext for $9.53 billion. Following the report from Bloomberg, trading in shares of NYSE Euronext and Deutsche Boerse was frozen due to concerns over significant price movements. If the transaction is completed, it would create a trading powerhouse with a market capitalization of listed companies at $15 trillion.
Under the terms of the proposed merger, the combined company will have dual headquarters at Deutsche Boerse’s green tower near Frankfurt, Germany and at 11 Wall Street, New York City. The merged company will be headed by a Board with seventeen members (fifteen directors plus Chairman and CEO). Nine out of the fifteen directors shall be selected by Deutsche Boerse. The remaining six directors will be selected by NYSE Euronext.
Duncan Niederauer, who is currently the CEO of NYSE Euronext, will become the CEO of the new company. He will also lead an Executive Committee, which would include an equal number of existing Deutsche Boerse and NYSE Euronext executives.
Shareholders of NYSE Euronext voted in favor of the merger on July 7, 2011. The merger was approved by Deutsche Boerse shareholders a week later on July 13, 2011.
The merger requires a number of regulatory approvals in the U.S. and Europe. The major concern among regulators is that the merger would create a “de facto monopoly.”
NYSE Euronext CEO Neiderauer said back in October 2011 that the company was issued European Union’s so-called statement of objections. The statement was over 100 pages long. Niederauer said that the company would respond to the statement within two weeks.
Back in March, Joaquin Almunia, the European Union’s antitrust commissioner, said that he was worried that the deal would possibly monopolize the derivatives market due to Deutsche Boerse’s “vertical silo”, which directs all trade through its own services. Almunia said that he prefers a more open business model for markets.
The merger received U.S. antitrust approval on December 22, 2011. However, regulators placed a condition that International Securities Exchange, a subsidiary of Deutsche Boerse, divest its 31.5% stake in Direct Edge. The deadline for the merger was extended to March 31, 2012 as Deutsche Boerse and NYSE Euronext tried to get the approval of European Union regulators.
The EU blocked the proposed merger on February 1, 2012. The European Commission, which is the EU’s executive body, said that the merger would result in a combined exchange that would control over 90% of the trade in European derivatives.
Ruling against the proposed transaction, the European Commission report said, “The merger between Deutsche Boerse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide… These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive.”
Following the opposition, NYSE Euronext and Deutsche Boerse decided to scrap the plans to merge. NYSE Euronext said in a statement after terminating the merger agreement that it would now focus on the successful standalone strategy that has delivered substantial growth and diversification of the company’s business and that would look to return capital to shareholders by leveraging its financial strength.