21 January 2013

FN: ICE plays it cool on Euronext

While uncertainty remains over how the IntercontinentalExchange defines Euronext, its rationale for the move is clear. A successful spin-out of Euronext would reduce the level of regulatory oversight, reduce leverage, and operationally streamline what would be a very complicated group.

When the IntercontinentalExchange announced its $8.2 billion acquisition of NYSE Euronext last month, it said it would explore a separate flotation of the Euronext exchanges to create an “independent continental European-based entity". The move is also likely to help Ice sidestep potential concerns among European regulators of a further shift in the exchanges’ executive power away from Europe.

But the planned Euronext initial public offering has led to a number of questions, chief among them: How does Ice define Euronext and what is its value? Ice said the IPO assets were likely to include “all the cash equities and derivatives products currently offered on the continental European markets”. The derivatives would not include Liffe products, analysts said, but the single stock and equity index options traded on each exchange and Matif, a Paris-based futures exchange, primarily used for commodity derivatives. The lion’s share of these contracts trade on the Paris and Amsterdam bourses, which were responsible for about 175 million derivatives contracts in the 12 months to September 2012.

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