Euronext increases Nordic focus by acquiring VP Securities
Thursday, 23 April was a major day for VP Securities. Euronext, the leading pan-European exchange, announced that it is acquiring VP in a move to strengthen its post-trade business. With this acquisition, VP will join a pan-European group of CSDs and exchanges.
The next step towards European harmonisationAccording to Niels Olsen, CEO at VP, this acquisition reflects the ongoing trends of consolidation and harmonisation in the European market. “The market has been changing for quite some time. We are moving away from a predominately national market to an international one, where you have to interact across national borders. Regulations such as CSDR, T2S as a shared, European settlement platform, all of these drivers are creating a more uniform post-trade environment. To compete in this new type of environment, you need an international approach and the capability to invest in technology and scale”.
The perfect strategic fitThe acquisition makes sense from a strategic perspective, as VP will play a key role in helping Euronext achieve its strategic goals of building the leading European market infrastructure, strengthening its post-trade activities and expanding its presence in the Nordic region. “The acquisition of VP Securities will position Euronext as a leading CSD operator in Europe, and as a leading player in the Nordic region,” states Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext.
Euronext’s strategy, in turn, coincides well with VP’s own strategy of expanding beyond the core CSD business and offering ancillary services. “Euronext is also interested in offering post-trade value-added services, and together, we are in a much stronger position to develop attractive services for both Danish and international investors. Euronext’s focus is on connecting local economies to the global capital markets, which mirrors our focus on making the Danish market more accessible and attractive to international investors. And lastly, Euronext’s desire to accelerate innovation is something that complements our own desire to develop innovative products and services,” Niels Olsen highlights.
Maria Hjorth, Deputy CEO at VP, agrees, and draws attention to Euronext’s strong technological focus as an advantage for VP. “We are a technology company, and we are in the process of modernising our own platform. This acquisition will give us the scale and size we need to achieve our ambitions in this area.” The companies also share an interest in emerging technologies. “As a part of its strategy, Euronext is examining technologies like tokenization, blockchain and artificial intelligence, to see how these can accelerate business innovation. We have also been looking at these technologies to see how they apply to our post-trade services,” she states. Euronext has also committed to supporting the development of new post-trade services and upgraded technology for each of its CSDs, something that Maria Hjorth feels will benefit VP. “There’s no doubt that our innovative power will increase significantly as a result of our inclusion in Euronext.”
Opportunities for cross-border collaborationIn addition to the increased investment in VP’s technological infrastructure, VP will also benefit from the economies of scale that come from being a part of an international group. “There is a synergy effect that we gain by interacting with other exchanges and CSDs across Europe. We can benefit from their know-how, learn from their experiences and give our customers access to products developed in other parts of Europe,” comments Maria Hjorth.
Euronext’s increased Nordic focus and presence, with two out of the four Nordic CSDs as a part of Euronext, will also allow VP to explore the possibilities of strengthening its intra-Nordic cooperation. “There are a number of similarities between Euronext VPS and VP, for example the overlap of large customers, and our companies have always enjoyed a cooperative relationship,” comments Niels Olsen. “The fact that we are now owned by the same company will undoubtedly create more opportunities for collaboration.”
2020 goals remain unchanged
With sights set on Europe and the broader perspective, some might wonder if VP will lessen its focus on the Danish market as a result of the acquisition. Niels Olsen is quick to set any such concerns to rest. “We will continue to have a national infrastructure and cooperate closely with our Danish customers,” he states. “In fact, by joining Euronext, we’ll be able to service our customers even more effectively, as we can give them access to a more competitive product portfolio based on products and services from all across Europe” Maria adds.
While the future offers an exciting array of possibilities, for right now, VP staff are focused on delivering on existing goals and projects. “We’re not getting ahead of ourselves. We have several projects that we’re working on at the moment, and we are completely focused on delivering these projects on-time and according to plan,” Niels Olsen says. “Our customers can anticipate the same reliability and level of service that they’ve come to expect from VP, also when we’re a part of Euronext.”