Euronext to build post-trade services through Danish CSD acquisition
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Euronext to build post-trade services through Danish CSD acquisition 24 April 2020Copenhagen Reporter: Drew Nicol
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Euronext is set to expand its Nordic presence and double its central securities depository (CSD) business through the acquisition of a majority stake in Danish CSD, VP Securities.
The European stock exchange says the deal also serves to significantly bolster its post-trade services offering and further diversify its revenue stream to become less reliant on volume-related revenue.
Euronext has this week entered into definitive agreements to acquire around 70 percent of the shares of VP Securities from its current owners, the Danish Central Bank and four major Danish financial institutions, Danske Bank, Nykredit, Nordea and Jyske Bank.
The price offered for 100 percent of the shares is €150 million and the deal is expected to be completed by early Q3 once regulatory approvals have been received.
Euronext has confirmed it’s also in the market to acquire the remaining shares under the same terms.
VP Securities is Denmark’s only CSD and covers fixed income, equity and investment funds. It ended 2019 with more than €1.2 trillion of assets under custody and 16.6 million securities settled and generated €57.1 million in revenue for the year.
VP Securities is also currently the only CSD capable of acting as a service provider and conduit for the exchange of unique transaction identifies (UTI) as required under the Securities Financing Transactions Regulation.
The CSD is collaborating with the Danish Bankers’ Association to implement a method to share UTIs automatically for bilateral SFTs by utilising SWIFT trade confirmation messages.
Elsewhere, it was the first Nordic CSD to be granted a licence under the Central Securities Depository Regulation and to join the European Central Bank’s Target2-Securities settlement system.
“VP Securities will become a key component of Euronext’s post-trade strategy, alongside Euronext VPS in Norway and Interbolsa in Portugal, enhancing Euronext’s expertise in custody and settlement activities as well as the delivery of post-trade value-added services,” the exchange says in a statement.
Euronext adds that it plans to “leverage this enlarged footprint to support the development of new post-trade services and upgraded technology for each of the Euronext CSDs”.
Stéphane Boujnah, CEO and chairman of the managing board of Euronext, explains: “The acquisition of VP Securities will position Euronext as a leading CSD operator in Europe, and as a leading player in the Nordic region because there is no European success without a Nordic dimension."
The deal for VP Securities follows the acquisition of Oslo Børs VPSin June 2019, and Nord Pool in January.
Peter Lybecker, chairman of the board of directors of VP Securities, adds: "In a market-changing from a predominantly national market to a European market, economies of scale will matter even more to be able to offer competitive services to the customers and ensure continued investments in new technology.”
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