In a bid to expand its global footprint, NYSE Euronext (NYSE:NYX) has announced a partnership with investment technology provider TradingScreen to give investors easier access to corporate bond markets such as NYSE BondMatch (see Platform gives access to the European Central Order Book, Futures Magazine). NYSE will finance software licensing costs for three months, allowing institutional investors to access to the European Central Order Book (ECOB), displaying liquidity in its aforementioned bond market while maintaining a consolidated database of bond markets that meet Cassiopeia criteria. The display will be further reconfigured to include TradingScreen’s multilateral trading facility, Galaxy, which is scheduled for launch shortly.
Elsewhere In Europe
NYSE has also signed a co-operation agreement with the Cape Verde Stock Exchange through its Portuguese branch, the Euronext Lisbon (NYSE Euronext and the Cape Verde Stock Exchange sign cooperation). The two exchanges will work in tandem to develop the capital markets in Portugal and Cape Verde, engaging in training and focusing on providing higher liquidity while trading listed securities. The duo will look to identify potential avenues to help revive investor confidence in the reeling Portuguese and African economies and have also set up guidelines for joint ventures in the future. We expect NYSE’s investments to drive the European cash products trading volume through our forecast period.
The collaborations will help NYSE’s European operations; the company recently launched a regulated exchange, NYSE Euronext London, after falling short in its earlier bid for the London Metal Exchange. (See NYSE Euronext Answers London Calling With Rival Exchange) It intends to expand its NYSE Liffe Clearing operations after terminating clearing services received from LCH.Clearnet. The company will migrate clearing services from derivatives markets in Amsterdam, Brussels, Lisbon and Paris to a central counterparty clearing house (CCP), NYSE Clearing, from 2013. A central system will help improve operating savings and will attract more customers (LIFFE Gives Notice to Terminate Clearing Relationship Agreement With LCH.Clearnet Ltd). We expect European derivatives trading volumes to increase through the Trefis forecast period, as market volatility promotes options trade.
No Place Like Home
Despite the uncertainty regarding the Facebook (NASDAQ:FB) IPO saga, NYSE Euronext raised $17.1 billion in IPO proceeds worldwide in the first half of 2012 (NYSE Euronext Raises $17.1 Bln In Global IPO Proceeds). Although the market has dried up since the debacle, with several companies like Palo Alto Networks and ServiceNow reconsidering their decision to go public, we expect the U.S. listings, which account for nearly half of our price estimate for the company to gather momentum, once the dust surrounding the Facebook incident settles down. (See NYSE Gets Creative In Trying To Spur Interest In The IPO Market)
Facebook itself was considering a switch to NYSE from rival Nasdaq OMX (NASDAQ:NDAQ), but decided against the move as it would further erode investor confidence (Report: Facebook Decides Not to Ditch Nasdaq for NYSE). We will keep a close eye on NYSE and the markets in coming months.
Our price estimate for NYSE Euronext’s stock is $34, approximately 40% above the current market price. You can gauge the effect of a change in our forecast by modifying the interactive charts above.
Disclosure: No positions