FOW - Global Investor Group

Interview - 9 January 2023

Euronext hits trading milestone with total return future

Euronext has started the year strongly in derivatives by passing a key milestone with one of its most successful recent products and launching a trading screen to revolutionise how firms interact with the European exchange group.

Euronext, which operates markets across Europe, said it passed on Thursday January 5 the one million lot milestone for its CAC 40 Total Return Future (TRF), an innovative product launched by Euronext in late 2018 to offer a cleared, lower margin equivalent of a total return swap.

Full article on globalinvestorgroup.com (English): https://www.globalinvestorgroup.com/articles/3699688/euronext-hits-trading-milestone-with-total-return-future

FOW - Global Investor Group

Interview - 11 October 2022

Euronext targets banks, hedge funds with extended TRF maturities

Euronext has said it is targeting banks and hedge funds with the launch of extended maturities for the total return future based on the French blue chip index, marking the latest addition to a successful new product set from the European exchange group. 

Full interview on globalinvestorgroup.com (English): https://www.globalinvestorgroup.com/articles/3699293/euronext-targets-banks-hedge-funds-with-extended-trf-maturities 

Structured Retail Products
Interview - 11 October 2022

Euronext targets banks, hedge funds with extended TRF maturities

INVESTEMENT BANKS USE THIS PRODUCT ALONGSIDE THEIR ACTIVITY IN STRUCTURED PRODUCTS.

Full interview available on StructuredRetailProducts.com (English): https://www.structuredretailproducts.com/news/details/78526 

FX News Group
Article - 11 October 2022

Euronext announces extended maturities on Total Return Futures on CAC 40 Index 

Euronext announces the extension of the maturities available on the Total Return Future on the CAC 40® Index, commonly known as the “CAC 40® TRF”

Full article available on fxnewsgroup.com (English): https://fxnewsgroup.com/forex-news/exchanges/euronext-announces-extended-maturities-on-cac-40-trf/

Finadium
Article - 4 September 2019

FISL Europe: Total Return Futures advance across participants and regions

"The TRF on CAC 40 index is the best product launch made by Euronext in the past years, said Charlotte Alliot, co-head of Equity Derivatives at Euronext: “This is due to the increased regulatory pressure on OTC trading, in particular since the implementation of EMIR which has impacted the level of collateral linked to the transactions.” The product was launched at the end of 2018, and at August-end €11 billion notional value has been traded with open interest registered on all December maturities."

Full article available on finadium.com (English): https://finadium.com/fisl-europe-total-return-futures-advance-across-participants-and-regions/

As part of Euronext’s strategic plan 'Growth for Impact 2024' and its 'Fit For 1.5°' climate engagement, Euronext is committed to reduce its Scope 1 and Scope 2 emissions by 70% in 2030 compared to 2020, as announced through its SBTi targets. Scope 1 emissions in particular are being reduced, through energy efficiency upgrades in the building portfolio and energy efficiency investments.

Euronext Paris, part of Euronext Group, is fully committed to the Group’s ambition, and announces today its energy sobriety plan:

• Euronext Paris has built a dedicated plan to follow the French Government’s recommendations to further limit energy consumption at peak hours – 08:00 to 13:00 and 18:00 to 20:00.
• Euronext Paris has decided to join Ecowatt, an alert system in the case of too great a tension on the network. In the case of an Ecowatt alert, further savings measures will be activated in Euronext’s Paris premises during peak hours.
• Euronext has migrated its core data centre to a fully green facility, which enables French market participants to reduce their carbon footprint, and strictly monitors the energy efficiency of its disaster recovery centre based in France.
• Euronext is directly engaging with both employees and suppliers to improve energy savings.

Euronext Paris is also participating in this year’s Championnat de France des Economies d’Energie, which encourages companies to mobilise as part of the national energy efficiency plan. 

Euronext’s footprint in France mainly consists of the Euronext Paris building in La Défense (10,000 sqm) and a disaster recovery data centre in Ile-de-France.

At end September 2022, the France-based workforce of Euronext in France represented 500 full-time employees, alongside around 100 contractors working at least partially on the premises.

Reducing and optimising the building’s electric consumption

An already active energy-saving strategy

The Euronext Paris building was built in 2009 and Euronext has rented it since 2014.

We monitor our energy building performance through external rating agencies, such as through the BREEAM label, which rated the building as 'very good' in terms of its energy footprint in 2022.  Euronext Paris also obtained a HQE label in 2009, with 'very well-performing' ratings. 

As of September 2022, Euronext had saved in Paris 14.8% of its electricity consumption compared to the same period in 2019 – comparing with a pre-COVID year with similar summer temperatures in Paris. Euronext does not have any gas consumption in France.

An optimised heating policy

Since the first half of 2022, Euronext Paris has adapted the basis temperature of the office all year round to save energy. During the summer, the cooling system is set up to maintain a minimum temperature of 25°C, and during the winter, the heating system is set up to maintain a maximum of 19°C.

Since September 2022, Euronext Paris has further optimised its building’s heating programming, by pre-heating as much as possible in the hours preceding the peak consumption hours and then making use of the building inertia.

• A more aggressive scenario will be implemented during periods of low occupancy and in case of Ecowatt amber or red alerts, with a reduction of heating and cooling.

Going further in our low-consumption lighting strategy

External lights have been switched off entirely at Euronext Paris.

As for internal lighting, Euronext Paris follows a continuous improvement approach so that our equipment can rely on the technology with the lowest energy consumption. High-consumption neon tubes have all been replaced by LED lights; other equipment is replaced with low-consumption neon tubes or LED lights at the end of its lifecycle.

All eligible areas in the building (accounting for 80% of the building area) are equipped with movement detectors ensuring lights are only on when required during the day.

Since September 2022, the automatic complete light shutdown in the evening has been advanced by one hour to 21:00.

• In case of Ecowatt amber or red alerts, the light shutdown would be advanced and non-essential lights, computers and TV screens would be switched off.

Offering to French market participants a fully green core data centre

As part of Euronext’s 'Growth for Impact 2024' strategy, Euronext has successfully relocated Euronext’s Core Data Centre from Basildon (UK) to Bergamo (Italy) to a new green facility, powered entirely by renewable energy. This transformative move sets the standard for the industry. The new Core Data Centre is powered 100% by renewable energy sources and self-produces energy through solar panels and its own hydroelectric power stations.

Euronext’s recovery data centre in Ile-de-France has been optimised to require the minimum energy consumption, consistent with its Disaster Recovery infrastructure function. In average, Euronext’s Ile-de-France data centre consumes approximately 95KW per hour (average calculated on a monthly consumption). 

Engaging actively with suppliers to set their own Scope 1 and 2 emissions reduction targets

Euronext is directly engaging with key suppliers and deploying a new supplier onboarding platform, which will support the 'Euronext Supplier Code of Conduct', including provisions regarding environmental protection.

By 2027, Euronext will engage with suppliers responsible for two-thirds of Euronext’s emissions and require them to set targets on their own Scope 1 and Scope 2 emissions, in alignment with the science-based targets methodology. 

Leveraging on employee engagement to limit energy consumption

The Euronext Group has implemented a travel policy to limit air travel and prioritise travel by train. Euronext plans on reducing its business travel emissions (Scope 3 emissions) by at least 46.2% by 2030 compared to 2019. 

Euronext Paris reimburses part of public transportation fees for each employee. Euronext Paris encourages our employees to travel to work by bike and has installed bike parking spaces inside the Euronext Paris building.  

Euronext will also engage with employees to increase awareness and individual eco-gestures at work – especially digital sobriety – via internal communication campaigns, including by adhering to Ecowatt and participation in local events.

• In the case of Ecowatt amber or red alerts days, we will organise the charging of employees’ electric cars outside the periods of alert.

When Euronext completed its ambitious and challenging data centre relocation from the UK to Bergamo in Italy, ESG was among the key drivers. The move not only expanded trading possibilities for colocation clients, but also enabled them to increase their ESG performance. In this article, we explore the environmentally friendly features of the new Core Data Centre, and their impact on the Euronext ecosystem.

Moving Euronext’s core system from Basildon in the UK to mainland Europe, and in particular, to the Aruba Global Cloud data centre in Bergamo, Italy, took just 14 months.

It was a bold initiative that offered a host of benefits. They ranged from taking advantage of the skilled teams with valuable experience of operating data centres and colocation services, inherited as part of the acquisition of Borsa Italiana in 2021, to insulating the only pan-European exchange from the potential side effects of Brexit.

The Bergamo facility was chosen because it provided a perfect opportunity to leverage existing talent and resources while ensuring a smooth transition for Euronext’s clients. During the design phase, the relocation team made sure the technology would allow the company to manage its colocation service in-house in a manner compliant with MiFID II RTS 10.

But it wasn’t just compliance. Another important benefit is the data centre’s geographic location. The fact that it is on EU territory means that Euronext’s clients will be unaffected if the union imposes limits on trading for exchanges based in third countries. In addition, moving the data centre into Italy and the European Union brings it into line with Euronext’s European DNA.

However, the final key factor in making the decision was the facility’s excellent ESG credentials. They align perfectly with Euronext’s “Fit For 1.5°” climate commitment.

As a result, the new Core Data Centre enables both Euronext and its clients to take a concrete step toward fulfilling their ESG goals.

With the upcoming launch of the SCoRE (Single Collateral Management Rulebook for Europe) standards, the European markets will move one step further in their efforts to standardise corporate actions and remove legacy barriers and obstacles. Standardisation is welcome and necessary, but more is needed to address fragmentation. In this article, we look at how Euronext Securities’ new corporate actions platform will deliver the benefits of harmonisation to market participants.

In November 2021, Euronext announced its Growth for Impact 2024 strategic plan, which included a three-year roadmap designed to unlock the power of Euronext Securities as a European network of CSDs, while respecting local business models and specificities. One of the main strategic pillars is convergence – building a common foundation of technology and best practices across all four Euronext CSDs.

“Our strategy is about making it easier for our customers to interact with us across markets,” states Pierre Davoust, Head of CSDs at Euronext. “When we speak with our customers and when we analyse the situation across Europe, we can see that the number one pain point for clients operating in multiple markets is corporate actions. Corporate actions standards already exist, but not all CSDs fully comply with these standards, and there are many ways to understand and deliver the same standard. So, our goal now is to harmonise – not just standardise – the way corporate actions are processed across our four markets.”

In determining the best approach to harmonising corporate actions, Euronext Securities has drawn on the experiences of other business areas in the Euronext Group, as Pierre Davoust explains: “We learned a great deal as we scaled our common trading platform Optiq®, which is at the core of Euronext’s model, across our exchanges in Europe. We’ve seen the benefits of rolling out a common technology across multiple markets, while keeping strong roots locally.”

Delivering on SCoRE standards by November 2023

In November 2023, the European Central Bank (ECB) will launch its new collateral system, the Eurosystem Collateral Management System (ECMS). As part of this launch, the ECB has introduced new SCoRE standards, which set new rules for billing, corporate actions and triparty collateral. Every market participant using this new system must comply with these standards.

Euronext Securities will deliver full compliance with these standards in Copenhagen, Oslo, and Porto leveraging its new corporate actions platform. In Milan, Euronext Securities will make the necessary adaptations in the local system to comply and migrate to the new platform in 2025. This compliance is crucial as it will ensure euro-denominated bonds issued through our CSDs qualify for ECB collateral programmes. 

According to David Durand, Programme Director running the corporate actions programme at Euronext Securities, the launch of the new collateral system is an opportune time to address the varied approaches to corporate actions across Euronext Securities. “When we look at our network of CSDs today, we see a wide range of approaches and systems; however, modernising and converging without strong business incentive is not suitable,” David Durand states. “Additionally, our existing platforms don’t comply with the coming SCoRE standards.  Therefore, our programme was the perfect fit between mandatory standardisation and matching our convergence ambition.”

The corporate actions process is one of the largest hurdles to standardisation. It is the next barrier to be toppled to create a more harmonised European financial market infrastructure.” – David Durand, Programme Director, Euronext Securities.

Increasing market efficiency

With the new corporate actions system, Euronext Securities will be aligned with international corporate actions and ISO standards, which will also make it easier for all actors through the value chain. “When each CSD’s processes are aligned to international standards, this will make it more efficient for our customers to access CSD services in multiple markets,” David Durand says, highlighting how this increased market efficiency will in turn benefit all market participants. “Everyone wants greater efficiency in the market. To get that efficiency, we must address corporate actions. Money and securities are like water; they flow in the direction that offers less resistance. By removing these barriers, we ensure the smooth and efficient flow of securities throughout the European markets.”

Customers can improve internal efficiency as well

A common, harmonised approach to corporate actions also enables customers to increase the efficiency of their internal, or back-office operations. “When we introduced T2S and more harmonised settlement processes, many of our customers were able to streamline their internal procedures, particularly those who issue in multiple currencies,” David Durand comments. “Having one approach to corporate actions will enable our customers to further harmonise their back-office functions. Since this system will apply for all currencies and markets, customers can streamline their internal processes, rather than having to maintain separate processes for euro and local currency issuances.” 

New platform creates opportunities for automation

When we modernise our platform and processes, it always creates ways for us to work smarter and more effectively. “One of the benefits of the new system is that all customers will gain access to new functionality and increase the interoperability of their system with Euronext Securities CSDs,” says David Durand. “Whether they issue in euro, or one of the Nordic currencies, everyone will benefit from the new opportunities for self-service, increased flexibility and improved access to relevant information that the system will provide.” Customers will also benefit from increased straight-through processing, which allows for more automation.

Addressing needs of local players

Harmonising market practices across the four Euronext Securities markets will also give each CSD the chance to improve its existing corporate actions processes.

“Harmonising corporate actions creates an opportunity for each CSD to modernise legacy systems and take advantage of more sophisticated approaches to corporate actions. This, in turn, will benefit all our customers, whether they are international, regional, or local players,” Pierre Davoust says.

At the same time, he acknowledges that local players have legitimate, specific needs that the new platform must accommodate.  One such example is in Norway, where custodians servicing international clients need a standard way of processing corporate actions payments, whereas local retail clients rely solely on the CSD to process retail operations. To address these local market needs, Euronext Securities will adopt a two-layer approach. “The first layer will be a harmonised approach to market practices that will apply across all CSDs,” Pierre Davoust explains. “Then, when local players need specific, value-added services, we will build these into a second layer, on top of the first. In this way, we will develop a platform that works for everyone in all four markets.”

Wherever they engage with us, our customers will have the same experience, use the same technology and follow the same streamlined, harmonised processes.” – Pierre Davoust, Head of CSDs at Euronext

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