London Exchange Battle Set to Heat Up

Terry Flanagan

NYSE Euronext is hopeful that its expertise and strong brand will allow the transatlantic stock exchange operator to establish itself in London as a serious rival to the incumbent London Stock Exchange (LSE), after the successful launch yesterday of the first listing on its U.K. venue.

However, some market participants believe that NYSE Euronext, which will also face competition in the U.K. from multilateral trading venues Bats Chi-X Europe and the LSE-owned Turquoise, may take some time to snatch significant market share from the LSE and others.

“It’s a competitive move by NYSE Euronext to position itself against the likes of the LSE and Bats Chi-X Europe,” a market source, based in London, told Markets Media. “But it will be hard for them to gain a real foothold in these challenging markets.”

Eurotunnel, the owner of the rail tunnel linking England and France, which has a market capitalization of €3.5 billion, rang the opening bell yesterday morning to celebrate its admission to trading on the London market of NYSE Euronext. Its chief executive, Jacques Gounon, then jumped on the Eurostar and traveled through the Channel Tunnel to Paris, where he rang the closing bell of NYSE Euronext’s Paris market. Eurotunnel has now dropped its listing from the LSE, but is keeping its other listing in Paris.

“We are delighted to welcome Groupe Eurotunnel as the first company to join NYSE Euronext’s London market.” said Dominique Cerutti, president and deputy chief executive of NYSE Euronext. “We bring together an unparalleled capital markets community at NYSE Euronext helping issuers generate capital and liquidity. We look forward to a long and successful partnership with Groupe Eurotunnel as a valued member of our issuer community.”

NYSE Euronext established its London venue in July 2010, but uptake had been non-existent until Eurotunnel became its first listing. NYSE Euronext says it is now in talks with new potential issuers and has high hopes that the venue will become an extension of its pan-European operations, although it says that current market turmoils may hold back its expansionary plans in the short term.

In Europe, NYSE Euronext operates markets in Paris, Lisbon, Amsterdam and Brussels as well as the London derivatives market Liffe and SmartPool, a European dark pool.

“We have always welcomed competition,” Xavier Rolet, chief executive of the LSE Group, told CNBC. “This is what makes London great, the diversity of offering.”

Earlier this week, the LSE announced that it had hit quarterly growth forecasts despite weak trading conditions. It blamed “macroeconomic uncertainties” as the reason for its 15% drop in capital markets revenues. However, the 10% year-on-year rise in overall revenues in the second quarter of this year for the LSE Group was largely attributed to the inclusion of an estimated £35 million from FTSE International, the index business it acquired in December 2011.

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