NYSE Euronext

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NYSE Euronext
image:NYSE_logo.gif
Founded April 2007
Headquarters New York and Paris
Key People Jan-Michiel Hessels, Chairman; Marshall Carter, Deputy Chairman; Duncan Niederauer, CEO; Jean-Francois Théodore, Deputy CEO
Products Cash equities, futures and options on interest rates, equity indexes, bonds and commodities, and market data
Web site http://www.nyse.com/nyseeuronext/

NYSE Euronext (NYSE/New York and Euronext/Paris: NYX) was formed on Apr. 4, 2007, from the merger of the NYSE Group, parent of the New York Stock Exchange, and Euronext, the pan-European exchange operator.

The merger created the first transatlantic stock and derivatives exchange - following a fierce takeover battle for control of Euronext between the NYSE Group and Deutsche Börse - and incorporates the world's largest cash equities exchange and the third-ranked futures platform.[1]

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NYSE Euronext includes six cash equities exchanges in five countries and six derivatives exchanges, together offering trading, clearing and settlement in cash equities; equity, interest, commodity and currency derivatives; and bonds.

NYSE Euronext has grown dramatically through acquisition and various joint ventures with non-US exchanges. In June of 2008 it formed a deal with the State of Qatar to turn the Doha Securities Market (DSM) into an international cash and derivatives exchange. NYSE Euronext is investing $250 million into DSM for a 25 percent stake in the exchange, the largest investment the company has ever made in a foreign exchange. DSM will use NYSE Euronext technology for its cash and derivatives markets. The partnership is expected to close in the fourth quarter of 2008.[2]

On Jan. 17, 2008, NYSE Euronext acquired American Stock Exchange (Amex), expanding its footprint in the U.S. options business, as well as exchange-traded funds (ETFs), closed-end funds, structured products and cash equities. Total cost of the deal was $260 million in NYSE Euronext common stock, plus additional shares for Amex members of NYSE Euronext common stock based on the net proceeds from the expected sale of Amex’s lower Manhattan headquarters. Subject to approval by Amex members and customary regulatory approvals, including from the SEC and the Department of Justice, the transaction is expected to close in the third quarter of 2008 and to be accretive to NYSE Euronext’s 2009 earnings.[3][4]On June 17, 2008, NYSE Euronext and Amex announced that members of The Amex Membership Corporation (AMC) had approved the adoption of the merger agreement between AMC and NYSE Euronext and some subsidiaries. The Securities and Exchange Commission (SEC) must still approve the rule changes related to the transaction before it becomes final. Preliminary results indicate that the AMC memberships voted 695 to 7 in favor of the transaction. The number of AMC memberships voted in favor of the transaction represented approximately 84 percent of the total AMC memberships outstanding and entitled to vote on this transaction.[5]

In July of 2008, NYSE Euronext announced it had completed through its affiliate Euronext NV the acquisition of a 5 percent equity position in the Multi Commodity Exchange (MCX), India’s largest commodity derivatives exchange. The 5 percent equity investment was the maximum equity interest permitted by a single foreign investor in exchanges under current Indian law.[6]

NYSE Liffe LLC is a U.S.-based futures market that NYSE Euronext plans to open in the third quarter of 2008, pending regulatory approval. The exchange would further the rivalry between the NYSE and CME Group Inc., which agreed to buy the New York Mercantile Exchange. It's expected NYSE liffe would initially offer trading in futures on gold and silver, a franchise bought from CME early in 2008, and eventually add other products to its offerings.[7] CME is expected to continue to provide clearing services for the precious metals complex through the end of the first quarter of 2009.

As of the summer of 2008, NYSE Euronext already had a U.S. options business through its Arca platform, and had started to migrate some elements of its London-based Liffe futures operation to the U.S.[8]

Contents

Leadership

Duncan Niederauer was appointed CEO on Nov. 14, 2007, following John Thain 's departure to become chairman and CEO of Merrill Lynch. Niederauer, a former Goldman Sachs executive, joined NYSE Euronext as president and co-chief operating officer on Apr. 9, 2007.[9]

Jean-Francois Théodore, the former CEO of Euronext, was appointed as deputy CEO following the creation of the company in April 2007.

Other senior executives include: Miguel Athayde Marques, head of global market data; Roland Bellegarde, head of European cash markets; Joost van der Does de Willebois, acting CFO; Hugh Freedberg, head of global derivatives; Serge Harry, head of corporate strategy; Catherine R. Kinney, president and co-chief operating officer; and Lawrence Leibowitz, executive vice-president and co-chief operating officer.

Jan-Michiel Hessels, chairman of Euronext’s supervisory board, was appointed as chairman of NYSE Euronext following the merger, with NYSE Group chairman Marshall Carter becoming deputy chairman.

History

NYSE Group Companies

NYSE Group operates and regulates two securities exchanges: the New York Stock Exchange LLC ("NYSE") and NYSE Arca, Inc. NYSE Group is a leading provider of securities listing, trading and related information products and services. NYSE Group was formed in connection with the merger of the NYSE and Archipelago, which was completed on March 7, 2006.

  • The NYSE is the world's largest and most liquid cash equities exchange. For 215 years, the NYSE has facilitated capital formation, serving individual and institutional investors, the trading community and listed companies. As of Dec. 31, 2006, 2,713 issuers, which include operating companies, closed-end funds and exchange traded funds ("ETFs"), were listed on the NYSE.[10], and the NYSE's listed operating companies represented a total worldwide market capitalization of over $25.1 trillion. During 2006, on an average trading day, approximately 1.67 billion shares, valued at over $63 billion, were traded on the NYSE. The NYSE operates a hybrid market in which orders are electronically transmitted for execution. Specialists on the trading floor are charged with maintaining fair, orderly and continuous trading markets in specific stocks. Floor brokers act as agents on the trading floor to facilitate primarily large or complicated orders.
  • NYSE Arca was the first open, all-electronic stock exchange in the United States, with one of the leading market positions in the trading of exchange-listed securities and ETFs. NYSE Arca is also an exchange for trading equity options. Through NYSE Arca, customers can trade approximately 8,875 equity securities and more than 152,000 option contracts. NYSE Arca's trading platforms link traders to multiple U.S. market centers. The technological capabilities of NYSE Arca's trading systems, combined with its trading rules, have allowed NYSE Arca to create a large pool of liquidity. During 2006, on an average trading day, over 822 million shares, valued at over $28.6 billion, were traded through NYSE Arca's trading platforms.

NYSE Euronext Business Breakdown by Revenue

Based on third-quarter 2007 non-GAAP net revenues (excluding activity assessment fees, and liquidity payments, routing and clearing fees) NYSE Euronext revenues from its primary business activities are represented below as a percentage of total net revenues[11]:

  • Derivatives trading accounts for 25 percent
  • European cash trading accounts for 18 percent
  • U.S. cash trading accounts for 12 percent
  • Market data accounts for 13 percent
  • Listing accounts for 12 percent

Euronext Companies

Euronext, a relatively new financial entity when compared to some of the stalwarts in the industry, was formed on Sept. 22, 2000. Euronext was the first genuinely cross-border exchange organization. Following the merger of the Paris, Amsterdam and Brussels exchanges in 2000, Euronext acquired the London-based derivatives market, the London International Financial Futures and Options Exchange, and merged with the Portuguese exchange, BVLP, in 2002. As a result, Euronext now operates regulated cash and derivatives markets in Belgium, France, the UK (derivatives only), the Netherlands and Portugal. NYSE Euronext now refers to all of its European derivatives markets as Liffe.

Euronext has integrated its constituent markets based on a horizontal market model designed to generate synergies by incorporating the individual strengths and assets of each local market. This business model covers technological integration, the reorganization of activities into cross-border, strategic business units and the harmonization of market rules and the regulatory framework.

Euronext’s IT integration was completed in 2004, when a four-year migration plan resulted in harmonized IT platforms for cash trading (NSC) and derivatives trading (LIFFE CONNECT). As a result, every market participant has a single point of access to trading. Euronext’s IT structure was rationalized in 2005 with the creation of Atos Euronext Market Solutions (AEMS), an IT services-related vehicle between Euronext and Atos Origin.

Additionally, Alternext was formed in 2005 by Euronext to help small and mid-class companies in the Eurozone seek financing.

Liffe is one of the largest futures and options exchanges in the world. It operates a globally distributed central order book for its products through the LIFFE CONNECT electronic trading platform and, since October 2005, Bclear, which is a service that allows transactions that are executed off-exchange to be brought to Liffe for trade confirmation administration and clearing subject to the rules of the exchange.

During the first 10 months of 2007, Liffe volume totaled 799 million contracts, up 29 percent from a comparable period in 2006. Aggregate open interest across all products as of the end of October was 83.8 million contracts.

Governance

The NYSE Euronext supervisory board consists of 20 directors, 11 designated by NYSE, and nine designated by Euronext. The executive committee is drawn equally from each of NYSE and Euronext. Current members include:[12]

Regulation

Each of NYSE Euronext’s markets is regulated in accordance with local requirements. The merger was negotiated in such a way that no additional requirements were necessary for listed companies, in particular for European issuers who had been guaranteed the maintenance of their own regulatory framework and protection against the application of American law, in particular the Sarbanes-Oxley Act.[13][14]

In July 2007, the member regulation, enforcement and arbitration operations of the New York Stock Exchange combined with the National Association of Securities Dealers (NASD) to form the Financial Industry Regulatory Authority (FINRA). [15] FINRA, the securities industry's largest non-governmental regulatory organization, is responsible for conducting the regulatory oversight of the more than 5,000 securities firms and 666,000 registered representatives in the United States.

NYSE History

The New York Stock Exchange traces its origins to 1792, when [[First 24 NYSE Members|24 New York City stockbrokers and merchants]] signed what was known as the Buttonwood Agreement, forged under a Buttonwood tree. Throughout its history, membership prices have varied widely: In 1871, a seat sold for $2,780, and in December 2005 a membership sold for a record $4 million.

NYSE Organization

  • The exchange was first organized on May 17, 1792.
  • It was incorporated on Feb. 18, 1971, as the New York Stock Exchange, Inc., a not-for-profit corporation.
  • It was established as a for-profit corporation, the NYSE Group, March 7, 2006.
  • It announced an agreement to combine NYSE and Euronext to "redefine the marketplace for trading cash and derivatives securities, producing significant benefits for shareholders, issuers and users," on June 1, 2006.
  • The creation of NYSE Euronext occurred on Apr. 4, 2007.

NYSE Firsts and Records

  • First member firm to go public: Donaldson, Lufkin & Jenrette, 1970
  • First member firm to be listed on the NYSE: Merrill Lynch, 1971
  • Highest price paid for a membership: $4 million on December 2005
  • Lowest price paid for a membership: $2,750 in 1871
  • First listed company: Bank of New York, traded under the Buttonwood Tree, 1792
  • Longest listed company: Con Edison, listed in 1824 as the New York Gas Light Company
  • Oldest listed company: Sotheby's, founded 1744; listed 1990

NYSE Volume Market Highlights

Daily share volume (first day over):

  • 1 million - 1886
  • 5 million - 1928
  • 10 million - 1929 (It took one year to double share volume, and another 49 to quintuple it.)
  • 50 million - 1978
  • 100 million - 1982
  • 500 million - 1987 (It took only five years to quintuple share volume, culminating in the stock market crash of Oct. 19, 1987 - the crash was actually fairly short lived compared to the "furor" it caused.)
  • 1 billion - 1997 (It took another 10 years to double share volume.)
  • 2 billion - 2001
  • 3 billion - 2005
  • 4 billion - 2007
  • 5 billion - 2007

NYSE Highs And Lows

  • 5,799,792,281 shares on Aug. 16, 2007; lowest volume day: 31 shares on March 16, 1830
  • Dow Jones Industrial Average biggest single-day jump: 499.19 points, March 16, 2000
  • Dow Jones Industrial Average biggest single-day drop: 684.81 points, Sept. 17, 2001

News

On Nov. 6, 2008, NYSE Euronext announced it had signed a development partnership with the Zhengzhou Commodity Exchange as part of the exchange’s “major expansion in Asia.”[16]

References

  1. ↑ Analysts' Presentation. NYSE Euronext. Retrieved on January 8, 2008.
  2. ↑ The State of Qatar and NYSE Euronext Announce Major Strategic, Partnership. NYSE Euronext. Retrieved on June 26, 2008.
  3. ↑ "NYSE Euronext to Acquire the American Stock Exchange,” 1/17/08. NYSE Euronext. Retrieved on January 20, 2008.
  4. ↑ "NYSE Snaps Up Amex, Ending Long Rivalry,” 1/18/08. Yahoo!News. Retrieved on January 20, 2008.
  5. ↑ Press Release. NYSE Euronext. Retrieved on June 18, 2008.
  6. ↑ NYSE Euronext Buys 5 Percent in MCX. CommodityOnline. Retrieved on July 17, 2008.
  7. ↑ NYSE Moving to Boost Competition with CME. Chicago Business. Retrieved on July 17, 2008.
  8. ↑ NYSE Euronext To Have U.S. Futures License By July - CEO. NASDAQ. Retrieved on June 5, 2008.
  9. ↑ Press Release. NYSE Euronext. Retrieved on January 8, 2008.
  10. ↑ "Listed Company Directory”. www.euronext.com. Retrieved on December 1, 2007.
  11. ↑ "Record Year for NYSE Euronext in 2007”. NYSE Euronext. Retrieved on February 14, 2008.
  12. ↑ Euronext Board of Directors. Euronext. Retrieved on May 16, 2008.
  13. ↑ "AlterNews, July 2007”. Euronext. Retrieved on November 29, 2007.
  14. ↑ "NYSE Group and Euronext N.V. Agree to a Merger of Equals". NYSE Euronext. Retrieved on November 6, 2007.
  15. ↑ News Release. FINRA. Retrieved on May 16, 2008.
  16. ↑ Press Release. eFinancial News. Retrieved on November 7, 2008.
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