Cboe closes €45M EuroCCP buy, launching Cboe Europe Derivatives
Exchange operator Cboe Global Markets, Inc. has announced it has completed its acquisition of EuroCCP, a leading pan-European equities clearing house. The acquisition paves the way for the planned launch of Cboe Europe Derivatives, a new Amsterdam-based futures and options market, in the first half of 2021, subject to regulatory approvals.
The transaction brings together two companies that have long championed competition, open access and clearing interoperability in Europe. EuroCCP currently clears trades for 37 trading venues, which represent close to 95 percent of all equity trades executed on organised markets in Europe. Cboe sees an opportunity to further grow this business by capitalising on the strength of its pan-European network, and by pursuing the development of derivatives trading and clearing capabilities in the region.
As part of the transaction, EuroCCP put in place a committed credit facility of up to €1.5 billion. This facility is an important part of a number of new tools and procedures designed to strengthen the firm’s liquidity risk management framework and help ensure EuroCCP continues to meet relevant liquidity requirements under the European Market Infrastructure Regulation (EMIR).
Ed Tilly, Chairman, President and Chief Executive Officer of Cboe Global Markets, said:
“This acquisition is a significant milestone for our European business. Full ownership of a leading equities clearing house not only enhances our current European equities business, but also provides opportunities to diversify our business into trading and clearing derivatives in the region. We are delighted to welcome the EuroCCP team to Cboe Global Markets.”
David Howson, President of Cboe Europe, said:
“This deal marks the beginning of the next chapter for Cboe Europe and, together with EuroCCP, we couldn’t be more excited to further deliver on our pan-European mission by planning the launch of Cboe Europe Derivatives. We have listened to the needs of market participants and are designing this new market from a pan-European point-of-view, leveraging our global derivatives expertise, European equities footprint, and worldclass technology to build a more efficient equity derivatives market.”
Cécile Nagel, Chief Executive Officer of EuroCCP, said:
“We believe this transaction positions EuroCCP for continued success. In addition to building out our derivatives clearing services, we see many opportunities to collaborate with Cboe to expand our product offering across asset classes. With our shared values and focus on innovation and client service, together with Cboe we can do even more to advance capital markets in Europe.”
Cboe said that it plans to launch Cboe Europe Derivatives in the first half of 2021, subject to regulatory approvals. This Amsterdam-based market is expected to initially offer trading in equity futures and options based on six Cboe Europe Indices: the Cboe Eurozone 50, Cboe UK 100, Cboe Netherlands 25, Cboe Switzerland 20, Cboe Germany 30, and Cboe France 40 – all calculated using Cboe market data. Cboe plans to add futures and options on additional European benchmarks at a later date, based on customer demand. EuroCCP will provide clearing services for the platform, subject to regulatory approval.
Industry veteran Ade Cordell, who joined Cboe Europe earlier this year to oversee Cboe’s expansion into European derivatives, has been appointed President of Cboe NL, subject to regulatory approval. This is Cboe’s Netherlands-based exchange which launched in October 2019 and will be the future home to Cboe Europe Derivatives.
Ade Cordell, President of Cboe NL, said:
“There is an opportunity to improve the existing European derivatives market structure and unlock its true potential through the creation of a transparent, efficient, lit pan-European market. Our panEuropean model will enable all market participants to access a modern derivatives market through a single access point, creating efficiencies in trading and clearing.”
Cboe said that it has a long and successful history of innovation in the derivatives industry as founder of the listed options market in the U.S. and the creator of numerous groundbreaking products. The company plans to leverage this asset class expertise to bring the respected and transparent on-screen market structure utilized in the U.S. to Europe.
EuroCCP continues to operate as an independent subsidiary, retaining its name and continued leadership by Cécile Nagel. EuroCCP is headquartered in Amsterdam and regulated by De Nederlandsche Bank and by Autoriteit Financiële Markten.
Additionally, Cboe reaffirmed its previously disclosed earnings per share impact related to the acquisition of EuroCCP and its investment to build out pan-European derivatives trading and clearing, which are expected to reduce earnings per share by about $0.08 to $0.10 in 2020 and 2021. However, the company now expects the impact to be at the higher end of the range, primarily reflecting higher than originally projected facility fees associated with EuroCCP’s new €1.5 billion backup line of credit.