Euronext has had a busy year, working hard to increase the competitive edge amid large European rivals in the derivatives space.

Recent highlights for the European exchange group include the June 2019 acquisition of Norway’s Oslo Børs, which opens up a new front for Euronext, and the delivery of single stock dividend futures with shorter maturities in late 2019 and into early 2020.

In light of the volatility that swept the market and the disruption to regular dividend cycles caused by the escalating COVID-19 pandemic beginning of 2020, these launches were a masterstroke. They also led to Euronext winning the FOW International European Exchange and Exchange Innovation of the Year awards for 2020.

Charlotte Alliot, Head of Institutional Derivatives at Euronext, told Global Investor: “We have won these awards partly due to the incredible breakthrough we have made in the single stock futures and the single stock dividend futures market in 2020. It all started by the introduction of the new product feature in the dividend contract and specifically the implementation of a shorter maturity cycle which helped our clients to better hedge their risk.”

Euronext’s single stock dividend futures were previously only available in yearly maturities, which meant they only covered the risk on a full year basis.

Alliot said: “From October last year, we responded to market participants and started to roll out shorter maturities. Starting with semi-annual maturities, and in January, we started to roll out quarterly maturities.”

Of course, Euronext didn’t know the pandemic was coming but it was in the right place at the right time.

“I have to say the market timing of this has been absolutely perfect. Because of the COVID-crisis, 2020 has been a complicated year for equity derivatives contracts, with the cancellations or postponement of already announced dividend distributions. We have been the only ones able to provide the necessary hedging tool in these tough conditions.”

She added: “From January, our market share has been rising rapidly on dividend futures and single stock futures because these two products tend to trade together. We are proving to the market that we can be a giant and that we can react quickly, indeed we have continued throughout the year to roll-out these maturities in line with client demand to allow traders, brokers, asset managers to hedge their dividend exposure in extreme market conditions.”

Alliot, who has been with Euronext for more than a decade, starting there before it span-off the New York Stock Exchange in 2015, said the exchange group is also working hard on derivatives linked to ESG indices.

She said: “Our industry is transforming as we move towards a responsible economy. As mentioned by the European Commission, indices are going to play a key role in the allocation of assets to sustainable companies, and derivatives are needed in this transition to provide the right hedging tools and easy access to the ESG indices.

“Our ESG index group is one of the biggest ESG index providers in Europe if you consider the assets under management on the ETF and structured products, and this is why we are a natural entrant to this market. We have been working with our index team to launch the first ESG derivatives contract at Euronext, which is called the Euronext Eurozone ESG Large 80 index future, or the ESG80 for short, developed in partnership with V.E (an affiliate of Moody’s).”

The ESG futures contract, like everything that Euronext does, is based on discussions with clients, said Alliot.

She continued: “We launched the futures contract in June with the support of four market makers: BNP Paribas, DRW, Optiver and Societe Generale. What we are doing is a huge challenge, we are working to build an ecosystem. This is not a sprint, rather it is a marathon but we strongly believe this index has everything to establish it as a leading ESG benchmark in the Eurozone. ”

With the equity and ESG futures behind them, Alliot and her team are looking ahead.

“We have also completed the migration of the Norwegian derivatives market after the acquisition of Oslo Børs. This is a great achievement for us as it brings on board the Scandinavian investors and enriches our client base. Also, our existing clients will be able to access under the same IT and clearing infrastructure an additional set of products such as the Norwegian equity futures and options, so our markets are definitely getting wider.”

Alliot added: “We recently announced that we will offer a set of single stock futures with physical delivery which will further strengthen our offering. We have a lot more to come in 2021, watch this space because you will hear a lot more about new products from Euronext.”

Euronext is smaller and nimbler than the main European derivatives markets but Alliot says the exchange is also exceptional in other ways.

She said: “We want to be different and, with that in mind, there are three things that are important to us. The first is that we strongly believe we cannot develop a market without strong client intimacy, indeed we are developing this business with and for our clients and we believe only in win-win strategies.”

Alliot concluded: “Secondly, we are dedicated to always implement added-value solutions with a fair cost structure; it is a matter of respect to our clients that we see as business partners. And the third thing is agility. We are driven to work with clients as flexibly as we can be. We believe these three principles helped us succeed this year.”

Euronext has built momentum with strong product launches in 2020 and looks set to continue this work into 2021. The proposed acquisition of Borsa Italiana Group will only further boost the group and present new opportunities.

To watch the full interview, please click here: https://youtu.be/W27UToq4aS4

Contact Details:

Charlotte Alliot

Head of Institutional Derivatives

EURONEXT

14, place des Reflets | 92054 | Paris La Défense Cedex | France

Office: +33 (0)1 70 48 28 43| Mobile: +33 (0)6 83 07 47 04

Email: calliot@euronext.com