Poised for History

Industry veteran Jean-Marc Bouhelier is the CEO of Atos Euronext Market Solutions (AEMS), a joint venture of Atos and Euronext that provides trading technologies for exchanges, clearinghouses and capital markets. AEMS also supplies transaction technologies to Euronext and its string of exchanges. With the NYSE Group, Nasdaq Stock Market, the London Stock Exchange (LSE) and Euronext still duking it out, AEMS is poised to play a major role in establishing a global stock exchange or two (see page one). DWT's European reporter Olivier Laurent talks to Bouhelier about his company's role in the development of these platforms and what it will mean for AEMS.

The U.S. market is a very important market for us. We obviously help the Euronext derivatives market to sell their products in the U.S. through our global network. But we also take care of the trading platform, the network and operations of the platform and trading engine for the Chicago Board of Trade (CBOT), for example. We also have a business relationship with the Boston Stock Exchange (BSE) and the New York Board of Trade (Nybot). Consequently, we have developed quite a bit of knowledge in terms of running platforms in the U.S. As for NYSE Euronext, it's impossible for us to really comment on the deal, but what I would say is that AEMS will play a significant role in terms of helping develop its future plans for a global, multi-asset platform. We're in a good position to do that. With Euronext we developed the knowledge necessary to integrate and rationalize platforms. We moved from 10 platforms to only two. We can bring that experience to NYSE and Euronext.

On the derivatives side, we have Liffe.Connect. I would expect that we would use that as the key platform for the derivatives market. On the cash side, there are three components today. You have the technology that supports the NYSE trading floor; you have the technology that supports Archipelago, which is the electronic exchange that NYSE bought about a year ago. They intend to use it to build their Hybrid Market model. And then we have the NSC (Nouveau Système de Cotation), which is the cash platform for the European markets of Euronext. We would look at the best elements of those three platforms to construct a fairly modern global cash platform for the combined group. I would expect AEMS to actually play a significant role in helping shape that future platform.

Between AEMS and the technology organizations around the New York Stock Exchange today, there are about 2,500 people. We have 1,300 and I think they have 1,200. I would expect that the combined group would have enough resources to deliver on the integration plans. Hopefully, we would be able to leverage some of the resources that exist today in New York to actually service our existing customers as well as new ones in the North American market. On the one hand, there will be a lot of work to do to combine Euronext and the NYSE; but on the other hand, it gives us a footprint in the U.S. market, which is much bigger than the one we have today. As we do synergies and reduce the cost of the combined Euronext NYSE group, we should be able to redeploy some of these resources on other customers.

With all those things, you have to have a plan and you have to stick to the plan. But I would say that if we put all the right resources on it, if we have the right priorities, and if we give ourselves two to three years to rationalize a set of platforms, then that seems like a realistic objective. We helped CBOT switch from its legacy platform to our platform in 11 months. While they were doing that, they were also in the process of changing clearinghouses. It's a pretty large and complex project but you can actually do this project in that time as long as people remain focused and the priorities are clear.

Before joining AEMS, I used to work for Instinet in the U.S. equity market. I think there are some differences. In the U.S. you have multiple liquidity pools, so for example the user's smart routing technology is much more important than in Europe, where most of the liquidity tends to be in one place. There are a number of structural differences like that, and with Regulation NMS coming to the U.S., it will impact the way the U.S. markets are working. These differences will have to be taken into account.

The Euronext group has a history of merging a number of European exchanges, and I would expect if Borsa Italiana joins the Euronext family that we would look at bringing them onto the single Euronext trading platform and the single Euronext trading network in the same way we have done with Paris, Amsterdam, Lisbon and Brussels. My understanding is that the Borsa Italiana technology is outsourced to the SIA (Societa Interbancaria per l'Auto mazione), which is a separate company. We would have to look at what that means in terms of technology and when those contracts expire.