Euronext, the pan-European stock exchange, signed an agreement for it to acquire 51% of SecFinex, one of the leading European electronic trading platforms for securities lending. Subject to the approval of relevant authorities, the acquisition should be completed in the first quarter of 2007.
Launched in 2000, the SecFinex platform is based on leading-edge Internet technology, providing securities lending traders with secure access to a live price-driven marketplace. A cross-section of lenders, borrowers and intermediaries, including some of the major securities lending players in Europe, currently participate in SecFinex.
The acquisition will enable SecFinex to extend its client base to members of Euronext and Euronext.liffe, ultimately facilitating access to post-trade processing and thus delivering added value to the client base via Straight Through Processing. For Euronext, the move will give clients more efficient, cost effective and automated access to the fast-growing securities lending market.
The securities finance market is expanding rapidly in Europe, with outstanding balances exceeding US$500 billion in European equities in 20051 and the global market estimated to be in excess of US$4 trillion2. Global balances are estimated to increase by more than 20% over the next three years, with the European markets contributing to most of this growth1. In an OTC market where transactions are still completed mostly over the telephone, growth in volumes should automatically lead to stronger demand for electronic trading, which is more efficient, less expensive and thus more profitable. The volume of transactions traded electronically has increased five fold since 2003 and is expected to double over the next three years1.
SecFinex is to remain an independent company, with Euronext represented on its managing board. The other main shareholders, Société Générale Corporate & Investment Banking and Fortis Merchant Bank, have joined Euronext in committing to develop SecFinex’s market position. This structure will facilitate growth at SecFinex by providing the resources to become the leading force in online securities lending in Europe.
“We welcome Euronext as the main shareholder, and are convinced that its reputation, sales network and experience as a market operator, combined with the widely acknowledged expertise of SecFinex in securities lending, will provide a solid foundation for growth in a rapidly developing trading and exchange landscape,” said Allen Postlethwaite, CEO of SecFinex.
“Acquiring an interest in SecFinex will enable us to diversify the high added-value services available to our clients and enhance the liquidity of the securities lending market in Europe. This acquisition should give fresh impetus to growth in this area in Europe and is a new move towards bringing banking partners into a fast-growing and promising market,” commented Marianne Demarchi, Executive Director Cash Markets & Listing, in charge of Marketing and Business Development at Euronext.
1Source: Celent
2 Source: Spitalfields Advisors
