NYSE/EuroNext Merger Opens a World of Possibilities

Feb.12.07 | About: NYSE Euronext (NYX)

Echo To All submits: A January 4th Forbes article shows just how much EuroNext [EPA:NXT] is growing:

"Volumes on its four cash stock exchanges soared 34.7 pct to a record 209 mln contracts last year, representing turnover of 2.375 trln eur, a 33.2 pct leap... In its Euronext.liffe derivatives division, full year volumes surged 21 pct to 730 mln trades and the company is the second largest exchange globally by value of business traded... At the end of December 2006, total market capitalisation of the 1,210 companies listed on Euronext's Paris, Amsterdam, Brussels and Lisbon markets was 2.812 trln eur, up 22 pct year on year, the company said... Capital raised was also the most ever, and Euronext led the euro zone with a total of 21.4 bln eur offered by the 142 newcomers, representing an additional market capitalisation of 96 bln."

A key growth driver here is the derivative aspect of Euronext. Derivatives are the reason for the successful performance of IntercontinentalExchange, Inc. (NYSE:ICE), Chicago Mercantile Exchange Holdings (NASDAQ:CME) and others. Now with the merger of EuroNext and NYSE (NYSE:NYX), NYSE will be a place to trade such derivatives, on top of being the largest equity trading platform in the world.

I wonder if they plan on merging all trading possibilities via a transatlantic platform. I think they eventually will. As a small time investor, I would love to trade commodity derivatives as easily as I trade Options, but I can not because the internet brokerage houses do not let me.

With the NYX/Euronext merger I am envisioning the trading of currencies, commodities, equity futures and other derivatives open to the little guy via one traditional internet brokerage margin account. So not only have NYX bought huge growth as is, it potentially can be a much larger growth vehicle if the synergies of the merger are eventually realized.

NYX 1-yr chart

Disclosure: Author is long NYX.