Come September 2026, Euronext Amsterdam, Brussels, and Paris will follow Lisbon, Milan, and Oslo in having their trades settled within the group itself. Its CSD Euronext Securities will be taking over the settlement of equity trades at the three exchanges – timing it almost exactly a year before Europe’s intended migration to T+1 settlement. Euronext N.V starts by moving its own shares into Euronext Securities today. PostTrade 360° speaks with Euronext Securities head Pierre Davoust.
Currently, trade settlement for Euronext’s trading venue operations in Paris, Brussels and Amsterdam is operated by the group’s main European CSD competitor Euroclear.
This initiative is reminiscent of many that have come before it – the acquisitions of the Irish Stock Exchange in 2018, Oslo Børs in 2019, Borsa Italiana in 2021 – as well as more recently in the clearing area, the migration of its markets’ default clearinghouse role to Euronext Clearing in 2023. Now, the firm is staying on the path of consolidation, potentially strengthening its already significant position as the listing and trading venue holding 25 per cent of European equity trading activity. The firm presents its strategy as beneficial for tackling post-trade fragmentation in Europe – even as the industry remains divided on the issue.
Economies of scale
“We will indeed move business to Euronext Securities from legacy incumbent CSDs,” admits Davoust. “But we are not doing that to take business away from others. We are doing that to deliver to clients a true European solution.”
Euronext group CEO Stéphane Boujnah has previously suggested that there would be benefits in merging CSD activities between Euronext and Euroclear (as we noted here in 2021 and here again just weeks ago), though he has described the interest back from Euroclear as non-existent.
According to Davoust, the true European solution is one where clients “can benefit from economies of scale and have a simpler operating model”. Euronext claims in a press release that its latest move will “provide clients with streamlined post-trade operations, enhanced liquidity, and simplified market access across Europe”. The timing also appears strategic – taking effect about one year before Europe’s migration to T+1, to allow for “easier adaptation to regulatory changes”.
Taking action
Describing Europe’s harmonisation as “a very long and slow”, but necessary journey, Davoust says, “We are, of course, supportive of any harmonisation measures that public authorities may take across Europe. But we don’t think it’s right for the industry to wait for that before moving… Our view is that we don’t need to wait for this full harmonisation to happen before consolidating settlement or custody volumes in one CSD.”
He shares that Euronext has spoken with many market participants prior to deciding on this move. “I believe there is very strong support for the goal that we pursue, which is to consolidate the fragmented European post-trade landscape.” As an entity with the scale to drive change, Euronext is “not just writing a report or publishing a white paper, but is taking real action to move one step forward towards this consolidation”.
Local sensitivities
To manage the integration – and the local specificities that will have to be respected as long as harmonisation across Europe remains elusive, Davoust reveals that Euronext will be scaling up its local teams. This is not only in the new Dutch, French, and Belgian markets, but also in Porto, Portugal, where the firm has its excellence centre.
“Clients value the proximity of teams to manage the daily questions they may have and to manage the relationships with them,” he says. In the back office, the aim is to invest in systems that will enable full straight-through processing (STP) for client activities.
A different viewpoint
The voices that oppose such consolidation have given many reasons for their hesitancy, with complacency from a lack of competition being a point that often gets brought up. Davoust believes that the effect of consolidation might turn out contrary to the picture opposers are painting. “For decades, market participants had to settle at the different European equity markets locally; they didn’t have the choice. Now, for the first time, we are moving away from this model.” By giving options to participants that were once “stuck in a domestic settlement model”, Euronext is “bringing more competition to an area that had not faced strong pressure across borders so far”.
As for the domestic CSDs that might struggle to find their footing in this new landscape, Davoust reveals that Euronext is “investing heavily” in a new CSD platform that will “welcome other CSDs if they are happy to join”. He adds, “It makes sense in my view for smaller players to join a larger group of CSDs that have the scale to make the investments necessary to future proof the business.”
