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Euronext's acquisition of Borsa Italiana from the London Stock Exchange marks a significant milestone in the financial industry. This €4.4 billion transaction positions Euronext as the leading pan-European market infrastructure, enhancing its capabilities in equity and fixed income trading. The deal underscores the ongoing consolidation within European exchanges, aiming to connect local economies to global markets.
Founded in 1808, Borsa Italiana is the Italian stock exchange based in Milan. It offers a range of core services including stock exchange trading, market data services, and financial education through its Academy. Unique in its integration with Euronext, Borsa Italiana provides extensive market data and services. It also emphasizes sustainable finance and hosts events at the historic Palazzo Mezzanotte. Additionally, it offers specific bond products like BTP Più aimed at retail investors.
Euronext is a major European stock exchange and financial market infrastructure provider, connecting seven European economies through a single pan-European market. It offers a range of services including capital raising, product listing, trading platforms, market data, and post-trade services. Euronext is influential in the financial derivatives space and supports financial literacy and market quality. Its strategic plan, "Innovate for Growth 2027," underscores its commitment to market innovation and growth.
Euronext completed its acquisition of Borsa Italiana on April 29, 2021. This acquisition came at a time when the financial industry was witnessing significant consolidation, driven by the need to create more integrated and efficient market infrastructures. The deal was part of Euronext's strategy to enhance its leadership in European cash equities and fixed income trading, aligning with broader industry trends towards creating pan-European market infrastructures.
Market Expansion: The acquisition of Borsa Italiana significantly enhances Euronext's market presence, making it the leading pan-European market infrastructure. This move diversifies Euronext's business mix into new asset classes and strengthens its post-trade activities, with Italy becoming the largest revenue contributor. The combined entity now leads in secondary markets in Europe, with substantial daily trading volumes and a large number of listed companies.
Technology Integration: Euronext benefits from Borsa Italiana's technology through the migration of its cash equity and derivatives markets to Optiq®, Euronext’s proprietary trading platform. This integration is expected to drive pre-tax run-rate cost synergies by leveraging the combined group's capabilities, processes, and systems. Additionally, Euronext has signed a contract to host its Group core data center with Aruba S.p.A. in Bergamo, Italy, further enhancing its technological infrastructure.
Competitive Advantage: The acquisition strengthens Euronext's position against competitors by creating the number one venue for listing and secondary markets for both debt and equity financing in Europe. The combined group benefits from a more diversified geographical footprint and enhanced business diversification with new capabilities in fixed income trading and clearing. This strategic move consolidates Euronext's market infrastructure, connecting local economies to global capital markets and providing significant benefits for all market participants.
The acquisition of Borsa Italiana by Euronext has led to significant changes in operations and management. The Italian CEO of Borsa Italiana has joined Euronext's Managing Board, ensuring local representation in the combined group's governance. Key businesses and central functions are now based in Milan and Rome, reflecting a strategic integration of operations. Additionally, Euronext has established a new visual identity for Borsa Italiana, adopting Euronext branding. This integration plan includes representatives from both entities, indicating a collaborative approach to merging operations.
In terms of product offerings and services, the acquisition has broadened Euronext's capabilities, particularly in fixed income trading and clearing. The addition of MTS has positioned the combined group as the leading European government bonds trading platform. Enhanced post-trade activities, including a multi-asset clearing house and a significant Central Securities Depository (CSD), have also been integrated. These changes are expected to deepen the liquidity pool and diversify the business mix, benefiting customers across Euronext’s markets. While specific employee and customer reactions are not detailed, the strategic benefits for market participants are emphasized.
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