Chicago-based Cboe Global Markets announced on Tuesday (Dec.10) it will acquire Amsterdam's EuroCCP, the biggest pan-European equities clearing house. The acquisition continues a spate of dealmaking activity among market infrastructure operators in Europe, with Switzerland's SIX Group and Euronext competing to acquire Madrid-based Bolsas y Mercados Españoles (BME), while London Stock Exchange has agreed a deal to take on financial information provider Refinitiv.
Cboe, one of the world’s largest exchange holding companies, said it plans to fund the deal with cash on hand. The acquisition price was not publicly disclosed. The transaction would close in the first half of 2020, pending the receipt of required regulatory clearances.
Cboe's ownership of EuroCCP opens the door for the exchange operator to move into Europe's €735tn equity derivatives market. While Cboe expects its plans to acquire EuroCCP and pursue equity derivatives trading and clearing in Europe to generate positive financial returns longer-term, these initiatives are expected to be dilutive to earnings over the next three to four years. The potential impact to earnings per share is currently expected to be in the range of $0.08 to $0.10 for 2020 and 2021.
Ed Tilly, Chairman, President and Chief Executive Officer of Cboe Global Markets (pictured) said:
"Cboe's planned acquisition of a leading equities clearing house in Europe is an important step in our growth strategy for the region. We believe ownership of EuroCCP will enhance our current European equities business, while providing opportunities to potentially diversify our business, including trading and clearing derivatives, in the future.
Faced with the possibility of a no-deal Brexit or patchy UK access to the European Union’s financial markets in future, Cboe’s European arm opened a Dutch trading hub in October to ensure continuity for EU clients.
Commenting on the Cboe deal, Cécile Nagel, Chief Executive Officer of EuroCCP (pictured) said:
"Cboe is a staunch advocate of open access and interoperability, values which EuroCCP has long promoted, with an established track record of servicing clients globally and providing innovative products across numerous asset classes. We believe this transaction positions EuroCCP for continued success and we look forward to becoming part of the Cboe group. EuroCCP remains committed to offering a best-in-class service with leading client satisfaction."
EuroCCP currently clears trades for 39 trading venues, which represent close to 95 percent of Europe's equity landscape, making it the most connected equity central counterparty (CCP) in the region. EuroCCP clears on average between four to five million trade sides daily, totalling €30 to €40 billion in value. Over the past year, EuroCCP has signed various trading venues to clear their trades, including Oslo Bors in Norway, Borsa Italiana in Milan and Euronext Dublin.
Meanwhile, Euronext announced its binding deal to sell its 20% minority stake in EuroCCP to Cboe, alongside the other current EuroCCP shareholders. Euronext anticipates to receive net proceeds of approximately €9 million from the sale of its minority stake. Other EuroCCP, shareholders include Nasdaq, ABN AMRO Clearing Bank and The Depository Trust & Clearing Corporation (DTCC).