Euronext has widened the exchange-traded funds market with the launch of options on ETFs. It says the move will widen the range of strategies available to trackers “by allowing risk management together with performance dynamism”.
The move was welcomed by industry guru Deborah Fuhr. “I do think it’s a good development,” said Fuhr, who is executive director of global exchange traded funds research at Morgan Stanley. She said Morgan Stanley has seen a lot of interest from clients, as Euronext has based the options on the most liquid issues. Judging by the success of similar products in the US, their European siblings should be successful, she adds.
The European exchange trade funds market is heating up - US-based stock exchange operator Nasdaq launched a European-specific exchange traded fund based on its Nasdaq 100 Index, citing European demand. Exchange traded funds are funds that are exchange-listed and can be traded like stocks.
The development comes as Euronext says it has an almost 50% share of the European exchange traded funds market – and that its average daily turnover has almost doubled in the past year.
Euronext, the pan-European exchange comprising the Dutch, Belgian, French and Lisbon exchanges, said it had an average daily turnover of E129m of ETFs in 2002, a 94.4% rise over 2001. The exchange says it has a 46.6% market share in ETFs, also known as trackers.
The exchange reported an 18.1% rise in transactions in December, to 10.8m, with total transactions rising 12.3% to 137.9m. But the growth in volume could not mask the declines in Euronext indices. The Euronext 100 blue chip index fell 8.4% in December while the Next 150 index was down 5.1%.
Still, despite declining indices, Euronext still managed to record healthy profits last year. It made a pre-tax profit of E242.7m in the first nine months, a rise of more than 35% on 2001’s E179.6m for the same period. Three-month revenues also rose, by 8.5% to E744.6m, from E686.5m.
“These results prove that our business model works,” says Euronext chairman Jean-Francois Theodore. “We are still a young company, created only two years ago, but have so far achieved on time the integration of our businesses.”
Francois continues: “Our aim is to extract the maximum of synergies from the exchanges and franchises we run. We are delighted by the way LIFFE business is developing and adding value to the group. We are in a good position to further enhance shareholder value.”
The products are listed on Monep, and are slated to migrate onto LiffeConnect, Euronext’s derivatives trading platform, in March.

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