By Luke Jeffs

Stéphane Boujnah, the CEO and Chairman of the Managing Board of Euronext, completed in late April the €4.4 billion (£3.2bn) acquisition of Borsa Italiana Group from the LSE Group.

The deal is by-far the largest in Euronext’s history and transforms the exchange group from a respectable third in Europe behind the London Stock Exchange and Deutsche Boerse to a serious contender at the heart of the post-Brexit European Union.

Boujnah told Global Investor the Italian deal is huge for his firm.

“This transaction is transformational for Euronext. After this transaction, 25% of the equity traded in Europe is traded on Euronext, average daily volumes are approximately €12bn and 29 of the EuroStoxx 50 are listed on Euronext.”

He is also keen to benchmark his new book against those of his main rivals. “The aggregate market capitalisations of the companies listed on Euronext is approximately €6.4 trillion compared to €2.1tn in Frankfurt and approximately €3.2tn in London. So the aggregate market capitalisation of Euronext markets is approximately twice the size of the London exchange and three times the size of the Frankfurt exchange.”

Boujnah, who became head of Euronext in late 2015, can look back with some satisfaction at how far the group has progressed under his leadership.

“Following this transaction, Euronext has become extremely relevant. Euronext at the time of the IPO in June 2014 was a company with a market cap of €1.4bn and it now has a market cap of €10-€11bn. But we have also become more relevant for clients and, in this respect, the integration of Borsa Italiana is progressing as planned.”

But, of course, after the deal comes the all-important integration to deliver the savings and growth that convinced shareholders to back the deal in the first place.

Boujnah said: “The integration programme is developing well through a strong dialogue with the various relevant regulators, including Bank of Italia and Consob in particular. We are building with the Borsa Italiana teams what will be the new strategic plan for the combined entity for 2022, 2023 and 2024.”

The Euronext boss was circumspect about the plan, insisting all will become clear at a planned strategy announcement on 8 November in Milan. But he did say the location of the announcement is telling, reflecting Italy’s importance to the European group’s future.

“The Borsa Italiana assets now represent a significant part of the Euronext group, approximately 34% of the top line, and therefore Borsa Italiana will be a significant component of the growth strategy for the group.”

One change that has been announced, in fact as soon as Euronext completed the Borsa Italiana deal at the end of April, is that the main Euronext data centre is moving to Italy from the UK.

Boujnah said: “The first significant decision, which is in the process of being implemented, is the migration of the core data centre of the Euronext group from Basildon near London to Bergamo near Milan. This is a strategic decision.”

Anyone who has been to Basildon will understand the decision but Boujnah said it also reflects the changing dynamics of the European market linked to the UK’s decision to leave the European Union.

“The core data centre of Euronext was established in Paris in 2000. It was migrated to London in 2011 when London was the largest financial centre in the EU. Post-Brexit, for operational and regulatory reasons, the decision was taken to keep the core data centre back within the European Union hence to move it to Bergamo,” he said.

Boujnah said he is excited by the prospect of moving his data centre to and co-locating his main clients in Bergamo partly because that facility is among the new breed of green data centres powered by sustainable energy sources. He said the move to Bergamo will be finalised in the second quarter of next year

Boujnah said the Bergamo switch is part of broader plan to invest in and develop Borsa Italiana’s various trading and post-trade assets.

He said: “We are also trying to support the growth of the Borsa Italiana business by supporting MTS to make sure their secondary trading solutions are being deployed to support transparency in secondary trading of the Next Generation EU bonds to be issued over the next four years by the EU Commission.

“We are looking at the development of Elite, which is a platform operated by the Borsa Italiana Group, to promote SME listings. We are exploring how this business can be deployed in the rest of the European continent and particularly in Euronext countries.”

Through the Borsa Italiana trade, Euronext has also secured Italy’s clearing and settlement houses, which fits with a theme at the group. Euronext acquired the Danish central securities depository (CSD) VP Securities late last year and Norway’s VPS depository as part of Euronext’s acquisition of Oslo Bors in 2019.

“We are also implementing a programme to make Monte Titoli, the Italian CSD, a leading part of what we call the Euronext of CSDs. We currently operate one CSD in Portugal, one CSD in Norway and one CSD in Denmark. With Monte Titoli, the total amount of assets under custody in those four companies is €6 trillion, so the Euronext of CSDs has become the third player in Europe after Euroclear and Clearstream.”

Boujnah is nothing if not ambitious. He also wants to deploy a full suite of ESG projects at Borsa Italiana, the most visible of which will be the Italian MIB ESG Index to be launched in October.

And he has started talks with the Borsa Italiana management, regulators and supervisors about the transition of the Italian exchange’s trading technology from the current LSE Millennium IT technology to the Euronext Optic trading platform, slated for 2023.

Boujnah said: “Euronext’s commitment to Italy is massive. Whereas over the years, the LSE Group developed more in post-trade and data rather than in the Borsa Italiana core business lines, for us, Borsa Italiana represents 34% of the top line of the combined group and it is very much a focus for our strategic development.

“We are going to continue investing in Italy to strengthen the business of Borsa Italiana because we are extremely confident in the capability of the company to contribute to the growth of the combined entity.”