Euronext

Transatlantic Challenge

A stock market can prosper when its listed members expand and perform well. No stock market can thrive if an economy in which it operates lies stagnant. This is the story of Euronext Paris, an Exchange with a glorious past, which is now stuck with a strategy that does not work!

Paris, Amsterdam, and Brussels merged in stock market terms to form Euronext NV, in a bid to use consolidation savings and synergies for competition. Portugal has joined the bandwagon, and Euronext has acquired a British Derivatives Exchange in London. What is the result of this pan-European stock market effort? An entity which does not even have the revenues of the London Stock Exchange alone!

The puny dimensions of Euronext may be seen in the context of rapacious moves by NASDAQ and Chicago stock market interests to capture the London Stock Exchange. Nationalist thinking has a poor fit in the current stock market scenario, and Exchanges which cannot think globally are doomed. The European Union concept may have some political and social significance, but it is a non-starter in terms of forging exceptional stock market value! Euronext is an inward-looking body, the proclaimed merger benefits of which have simply not produced results. The core business of Euronext is on the decline, and faces serious threats from other continents.

The Euronext management has rushed towards further problems through haphazard and tangential movements which can only serve to dilute focus. It meddles in Information Technology, back-office operations, and other investments which bring no value to its listed members. The Italian Exchange has also been roped in to the mess! We have, as a result, a very poor product offer for stock market investors compared to the best in the business, especially in the United States. It is significant that NASDAQ and NYSE have shown little interest in Euronext, though their European expansion plans are no secret!

It is never too late to make a change in the stock market world. Euronext does represent some excellent companies, bonds, and knowledgeable investors. It should shed enterprises that lie outside its expertise, and focus on improving funding options for member companies, and global investment opportunities for Europeans. Euronext is a text-book example of the need to constantly review the purpose of a business, and to review all operating decisions against such a yardstick.

Do you agree?

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