Euronext // 2021 Universal Registration Document
Presentation of the Group
Company Profile
Regulated markets Regulated markets are markets constituted in an EEA Member State’s territory that meet the criteria of MiFID. Regulated markets have higher disclosure and transparency requirements than multilateral trading facilities. Trading on regulated markets is subject to stricter rules than on other types of trading venues. A regulated market cannot operate without securing prior authorisation from its regulator(s). Authorisation is subject to compliance with organisational requirements pertaining to conflicts of interest, identification and management of operational risks, systems resilience, the existence of transparent and non- discriminatory trading rules, as well as sufficient financial resources. Multilateral Trading Facilities Multilateral trading facilities (“MTFs”) are primarily institutional investor-focused marketplaces offering trading in pan-European securities on low-latency, low-cost platforms. They are usually operated by financial institutions ( e.g. banks and brokerages) or operators of regulated markets. MTFs are also subject to less stringent disclosure, transparency and trading rules than regulated markets and have more discretion to operate and organise themselves. Euronext operates a number of MTFs, including its SME and midcap- dedicated marketplace Euronext Growth (formerly Alternext) (in Belgium, France, Portugal, Norway, Ireland, and Italy), Euronext Access (formerly the Marché Libre) in Belgium, Portugal and France, and Euronext Expand in Norway. Euronext also operates two MTFs in Ireland: the Global Exchange Market, for the listing of debt securities aimed at professional investors and investment funds, and the Atlantic Securities Market, for US listed companies seeking to access euro pools of capital. In Norway, Euronext operates Euronext NOTC (short for Norwegian OTC-list), a platform to provide quotes and allow non-listed firms to benefit from a certain level of liquidity. Finally, Euronext operates Euronext Block, a pan-European equity block pool in 12 national markets across Europe. Systematic Internaliser The systematic internaliser (“SI”) regime was introduced by MiFID in 2007. It defines a SI as an investment firmwhich, on an organised, frequent systematic and substantial basis, deals on an own account basis when executing client orders outside a regulated market, an MTF or an organised trading facility (“OTF”) without operating a multilateral system. SIs are bilateral trading platforms usually operated by banks or brokers and offering them the possibility to match client orders against their own capital, as an alternative to sending their orders tomultilateral trading venues such as regulated markets or MTFs. SIs are subject to much lighter organisational, disclosure, and transparency requirements than regulated markets and MTFs while some elements of the framework may be amended (see Chapter 2 – Risk management & Control Structure ). Over-the-counter (“OTC”) In all asset classes, Euronext is faced with competition from unlicensed marketplaces operating over-the-counter.
Competition in fixed income continues to be fierce. MTS’ main competitors in both D2D (Dealer-to-Dealer) Cash and Repo are BrokerTec (owned by CME Group) and the voice brokers. In addition, local operators such as BME (owned by SIX) in Spain and HDAT in Greece continue to provide competition in the respective domestic markets. Bloomberg also competes in emerging and small-scale markets as well as for the Primary Auction business. Notwithstanding this, MTS continues to be the number 1 D2D venue for European Government Bonds, achieved by leveraging its global offering to incentivise and reward liquidity provision. Within D2C (Dealer-to- Client), the main competitors for MTS’ BondVision are Bloomberg, MarketAxess and TradeWeb (majority owned by LSEG). Euronext’s retail businesses face significant competition from Bank’s Systemic Internalisers as well as fromBloomberg, MarketAxess and TradeWeb. The competition for proprietary real-time market data is still limited as trading participants prefer to receive and use market data from the home exchange rather than using substitute pricing. However, Euronext is experiencing increasing pressure, both from a regulatory perspective (MiFID II) and a competitive perspective (alternative trading platforms, including multilateral trading facilities (“MTFs”) such as Cboe Europe, that focus on the most liquid blue chip stocks). Nevertheless, Euronext believes that diversity in the wide range of stocks listed on its markets is its strength in this increasingly competitive environment and will help Euronext retain its position as preferred data source. In less time-critical areas such as reference data – and particularly corporate actions and historical data – participants want a consolidated European feed from a single source. Euronext is not the only source of corporate actions or historical data so there is more competition in these areas. In the clearing space, while MiFID II / MiFIR provides Open Access provisions for cash equity clearing which leads to fragmentation and reduced profitability as many central counterparties (“CCPs”) get connected to multiple trading venues with pressure on fees, derivatives clearing operates through vertical integration whereby the overall trading and clearing value proposition are the main drivers to capture flows and markets shares. Euronext believes that with Euronext Clearing (ex CC&G) offering clearing services across all Euronext trading venues and asset classes, clients will benefit from an easier and streamlined access to Euronext’s liquidity pool, delivering operational efficiencies, margin efficiencies and competitive clearing fees while providing a robust and resilient risk management framework, being the core function of a CCP. Since 2014 and the entry into force of the Central Securities Depository Regulation (“CSDR”), CSDs can compete against each other across the EU. Euronext CSDs can thus offer issuance, custody and settlement for securities issued outside of Portugal, Norway, Denmark and Italy whereas other CSDs can provide such services to issuers in these markets. Euronext CSDs have been able to maintain their strong local positions thanks to their ability to manage local spécificities in each market as well as the network effect they have created over time. As for market operator technology, the market for financial information technology is intensely competitive and characterised by rapidly changing technology and new entrants. Euronext has built its next generation trading platform, Optiq®, and is well positioned to benefit from its state-of-the art stability, scalability and latency.
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2021 UNIVERSAL REGISTRATION DOCUMENT
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