“the development of stock exchanges”the nyse euronext merger 14 the emergence of a world leader...

© 2007 NYSE Euronext. All Rights Reserved.

Santiago, Chile - June 26 & 27, 2008

“THE DEVELOPMENT OF STOCK EXCHANGES”

2

Table of contents

1. The Consolidation Process of NYSE EuronextStep 1 – The Euronext StoryStep 2 – the NYSE Euronext merger

2. Benefits of listing on NYSE Euronext

3. Focus: the European Platform:1. Main benefits2. NYSE Alternext :The SME Market

Conclusion


Step 1. The Euronext Story

4

A transformational opportunity

• Creation of Euronext in 2000, from the merger of the three national stock exchanges: Amsterdam, Paris and Brussels

• IPO in 2001

• Portuguese exchange and Liffe joined Euronext in 2002

• Key factors:• Demutualization of exchanges• The Euro-zone created in 2000• Harmonization of regulations (the EU Directives)• And, first above all: Technology harmonization in order to maximize

economy of scale“IT has no borders and makes trading easier, more efficient and less expensive”

5

An incontestable integration track record…

2001 2004

Liffe.Connect

NSC

DE

RIV

AT

IVE

ST

RA

DIN

GC

AS

H

TR

AD

ING

Inde

pend

ent C

lear

ing

LCH

.Cle

arne

t

Inde

pend

ent

Set

tlem

ent &

Cus

tody

Eur

ocle

ar/C

rest

S.T.P

AmsterdamBrusselsLisbonParis

AmsterdamBrusselsLiffeLisbonParis FuturesParis Options

Amsterdam, Brussels,London, Lisbon, Paris

Amsterdam, Brussels,Lisbon, Paris

…to 2, respecting domestic regulationsFrom 10 trading systems…

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One holding company: one legal entity in each of the five jurisdictions

EURONEXT NV

Single Trading System: NSC

Single Trading System: Liffe.Connect

LiffeLondon

EuronextParis

EuronextLisbon

EuronextBrussels

EuronextAmsterdam

CASH TRADING

DERIVATIVES TRADING

7

A horizontal model with governance harmonization

• Each market undertaking receives a licence to opera te markets from its national regulators (e.g. Euronext Paris exchange’s licensed by the French AMF, Euronext Amsterdam by the Dutch AFM…).

• The governance of the Holding Company is the same a s the governance of each local market undertaking:

- In some cases: existence of a dual-body (Supervisor y Board and Managing Board e.g. Euronex N.V., Euronext Amsterdam ).- Everywhere (except for Liffe): a Managing Board wh ich is identical, and composed of the 5 respective CEOs, chaired in each case by the local CEO (M. Theodore as CEO of Euronext N.V. and Eurone xt Paris, M. Joost van der does de Willebois as CEO of Euronext Amster dam…)

8

Euronext regulators

AFM

NL

CBFA

B

FSA

GB

AMF

F

CMVM

P

* Euronext N.V. is also regulated by the Dutch Ministry of Finance, as the Holding Company of an Exchange operating a Dutch market

Amsterdam Brussels Liffe Lisbon Paris

Euronext NV

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Euronext College of Regulators

� Each Euronext market has a local regulator

� All Euronext regulators are party to one MOU signed in March 2000 (and completed later) which facilitate the pro cess and which inter alia covers:

� Co-ordinated supervision of the Euronext group;

� Co-ordination with regard to approval of rules and regulations (dedicated working groups, Steering and Chairman committees);

� Regulators co-operation enhances harmonization in t he context of the E.U. directives implementation.

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Entry Point for Issuers: indifferent

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Regulated market under Dutch Law

Regulated market under Belgian Law

Regulated market under Portuguese Law

Regulated market under French Law

Each company chooses his main entry point

Each member chooses its main entry point

One single Euronext rule book (admission criteria f or companies)

One single Euronext rule book (admission criteria f or members)

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The different Euronext cash markets

Marché Libre

Euronext

Amsterdam Lisbon Paris

Regulatedmarkets

Non regulatedmarkets

Euronext Euronext Euronext

MercadoEstrudurado

Marché LibreVrije markt

Brussels

Alternext Alternext Alternext

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Euronext Rule Book

�Contractual basis:

� Admission agreement with Brokers

� Written confirmation from Issuers to comply with Eu ronext Rule Book (or Listing agreement)


Step 2. The NYSE Euronext merger

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The emergence of a World leader

• April 2007: combination of NYSE group and Euronext NV, teaming up the largest stock exchange in the world e.g., NYSE in US$ and the first pan- European exchange, Euronext in €;

• Creating a truly global market place;

• With, once more, advanced Trading Solutions to drive Software & Technology Services Revenue Growth: the Universal trading Platform (“UTP”)

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UTPCashUTPCash

UTPCashUTPCash

With a Universal Trading Platform (target architecture)

NSCTCSLiffeConnect

NYSEARCA

Derivatives

Universal Trading Platform The global platform will be implemented in different data centers or instances, according to:

- Regulatory specificities

- Trading methods

- Products

- Business initiatives

Cash

Legacy Trading Engines


2. Benefits of listing on NYSE Euronext

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Asia

NYSE

� Cash Equities

� Fixed Income

� ETFs

� DRs

NYSE Arca

� Cash Equities

� Equity Options

� ETFs

� DRs

Euronext

� Cash Equities

� Bonds

� ETFs

� Certificates

� Warrants

� DRs

Alternext

� Cash Equities

� DRs

Liffe

� Derivatives

Gateway to the Euro-zone

Americas Europe

Strategic RelationshipsNYSE Euronext

The world’s largest equity market

� 5% equity stake

Global Choice of Listing Venues & Products Flexible Listing Venues Complement Capital Market Objectives

� 5% equity stake

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Value Proposition For Issuers�� ListingListing Venue ChoiceChoice

• Multiple entry points for issuers of any size and geography in Europe, U.S. and Asia• Listing options complement issuer’s strategy over time• Fast Path access to European platform for US listed companies (using SEC filings)

� Unique GlobalGlobal Visibility/MarketingVisibility/Marketing• Unparalleled Brand Association • Superior service offerings• Superior peer alignment

� Broad InvestorInvestor PoolPool• Global and local investor access to the world’s largest sources of capital• Investor outreach programs

� Enhanced Liquidity & ValuationLiquidity & Valuation• Access to $ and € – the world’s two leading currencies • Single Order Book• Product extensions (GDRs, ETFs, Options, Futures…)• Indices – international companies eligible for key indices (Shares & GDRs accepted)

� Sound RegulatoryRegulatory FrameworkFramework• Simplified Processes and Reporting• Filings/Ongoing Obligations in English• European listings under EU regulatory regime, no Sarbanes Oxley

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Nasdaq

Vibrant NYSE/Latin American Partnership

Source: Bloomberg; NYSE Research for Q1 2008*2 UK incorporated, Latin American-based companies (Hochschild Mining, PLC, Antofogasta, PLC) not accounted for in this figure; Grupo Clarin(59,606 shares/day), Banco de Chile (0 shares/day) are the companies that have been included.

Number of Latin American Companies

The NYSE is the Destination for Latin American Comp anies Outside their Home Market

88 6

Number of Latin American IPOs Since 2004

Average Daily Trading Value in Latin American Companies

NYSE

10 1

$4.7 billion $50 million

Latin American IPO Proceeds Since 2004 More than $5 billion Less than $500 million

Number of Latin American listings Since 2004 16 1

LSE

2

1

$883,000

1

$800 million

20

$0

$1 000 000 000

$2 000 000 000

$3 000 000 000

$4 000 000 000

$5 000 000 000

$6 000 000 000

$7 000 000 000

$8 000 000 000

2002 2003 2004 2005 2006 2007 Q1 2008

Average Daily Value NYSE Average Daily Value HOME MARKET

Source: NYSE Research

CTrading of Latin American NYSE listed companies

Source: NYSE Research

Over 67% of the trading in NYSE listed Latin Americ an companies occurs in the U.S.

An NYSE Listing Boots Liquidity for Latin American Companies

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Source: NYSE ResearchSource: NYSE Research

A NYSE Listing Boosts Global Liquidity for Chilean Companies

$0

$20 000 000

$40 000 000

$60 000 000

$80 000 000

$100 000 000

$120 000 000

$140 000 000

$160 000 000

2002 2003 2004 2005 2006 2007 Q1 2008

Average Daily Value NYSE Average Daily Value HOME MARKET

C

NYSE listing for Chilean companies is a “win-win” – p roviding liquidity and a broader shareholder base


3.NYSE Euronext:Focus on the European Platform

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Euronext Corporate structure

Euronext NV

AMSTERDAM BRUSSELS LISBON PARIS LONDON(Liffe)

100% 100% 100% 100% 100%

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A leading Marketplace For Listings

• Multiple entry points for issuers of any size and geography in Europe and the U.S.

• Access to the €uro-zone

• IFRS accounting standards recognized by the SEC

• While, acceptance of Canadian GAAP, Japanese GAAP & US GAAP by E.U regulators;

• Innovative “Fast Path Listing” gaining traction, with several NYSE-listed companies choosing to cross list on Euronext:

– Anheuser-Busch

– Philip Morris International

– Satyam Computer Services (India)

• The Universal Trading Platform project (U.T.P)

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Euronext’s Competitive Position in Europe

MARKET CAPITALISATION

European cash equity market capitalisation

(end 2007)

TRADING VOLUMES(2007)

Source: Federation of European Securities Exchanges (FESE)Figures include domestic & primary international listings

• Largest equity market in Europe

• Largest trading platform in Europe

Euronext27%

London Stock Exchange

25%

Deutsche Börse 14%

Spanish Exchanges 11%

SWX 8%

OMX 8%

Borsa Italiana7%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Euronext LondonStock

Exchange

DeutscheBörse

SpanishExchanges

BorsaItaliana

OMX SWXGroup

Val

ue tr

aded

€ b

ilion

0

20

40

60

80

100

120

140

160

180

Mill

ion

trad

es

Turnover Trades

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Sector Comparison Euronext vs. LSE

• Euronext sector profile very similar to London Stock Exchange

• Euronext – larger in Technology, Consumer Goods, Utilities, Industrials

Total market cap = €2,982 billion Total market cap = €2,769 billion

Source: Bloomberg, Euronext & LSE data as December 2007. ICB classification, domestic & primary listings, includes main market, SME market, equity investment instruments.

London Stock Exchange

Basic Materials 12%

Oil & Gas 16%

10%

11%

Financials 26%

6%

7%

6% 1%

4%

Euronext

5%

9%

24%4%

15%

4%Technology3%

Utilities10%

Consumer Goods14%

Industrials12%

Basic Materials

Consumer Goods

Consumer Services

Financials

Health Care

Industrials

Oil & Gas

Technology

Telecommunications

Utilities

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Euronext Alternext

Public Offer Private Placement

Track record 3 years 2 years 2 years

Accounting rulesIFRS compulsory or US,

Canadian or Japanese GAAP

IFRS or home country GAAP( US, Canadian, Japanese…)

Minimum free float 25% or 5% if shares in public > €5m

€2.5m €5m

DocumentationProspectus approved

by the home country regulator (visa)

Prospectus (visa)

Offeringcircular

Compulsory advisor Listing Agent (Euronext member)

Listing Sponsor

Language English authorized

Listing Requirements - Summary


NYSE Alternext: the SME Market

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Alternext – The SME Market

Alternext is an exchange-regulated market:

• Designed for small and mid sized companies

• Simplified listing rules and ongoing obligations

• Open for companies from all sectors and countries

• Launched mid-2005

• Broad €uro-zone access

• Same 4-country trading platform for Euronext and Alternext

• Alternext today:Number listed companies……………….. 120

Total market capitalisation………………. € 5 billion

Average deal size………………………… € 9.4m

Deal size range…………………………… € 2.6m to € 34m

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Alternext – Key Listing Requirements

2 year company track record (exemption for funds)

IFRS or US GAAP

• Audited FY accounts, un-audited 6 months report

Choice of Market Access:

• Fast track dual listing through recognised market status• Access via offering circular for companies listed on another market

Use of Listing Sponsor mandatory

Offering circularNot cleared by regulator; disclosures under responsibility of the Listing

Sponsor & Issuer

Prospectus cleared by regulatorEU Prospectus Directive

Minimum placing: € 5mMinimum free float: € 2.5m

Private placementAccess to qualified investors only

Public offeringAccess to retail and/or qualified investors

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Alternext – size profile

Alternext’s target company size of €20m - €250m achieved.

No micro-caps……better liquidity

Source: Euronext, LSE, December 2007

Distribution of companies by market capitalisation

AIM

0%

5%

10%

15%

20%

25%

0 - 2 2 - 5 5 - 10 10 - 25 25 - 50 50 - 100 100 - 250 250 - 500 500+

€ m

Distribution of companies by market capitalisation

Alternext

0%

5%

10%

15%

20%

25%

30%

35%

0 - 2 2 - 5 5 - 10 10 - 25 25 - 50 50 - 100 100 - 250 250 - 500 500+

€ m

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Alternext: IPOs and Investor Base

IPOs:• 80% institutional investor

participation, underpinning valuations

Investors:• Institutions from 14 countries

• Broad continental European institutional take-up

• Strong US-UK acceptance

Alternext: Truly Pan-European

Source: Lionshares

Origin of institutions(as of October 2007)

Euronext zone58%

U.S.2%

Canada1%

Denmark2%

Germany9%

Austria1%

Australia1%

Luxembourg5%

Sweden2%

Switzerland4%

Spain2%

U.K.13%


Conclusion…

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ConclusionThe following Key Elements of a consolidation…

1. A Unified Technology Platform

• Next step : a Universal Trading Platform (UTP) for both regions (US/EU) and both cash and derivatives

• Combined with the creation of well targeted MTF’s (Smartpool, High Frequency Trading …)

2. Harmonization of Exchanges Listing venues between the consolidated Exchanges (rule book)

3. Sound regulatory framework common to the various jurisdictions (E.U. Directives/ Corporate governance)

• An on going effort aiming at simplifying listing process and on going reporting obligations (ex/ Mutual recognition process)

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Conclusion

… Do allow attraction for Issuers and Investors give n:

• Access at once to multi-markets in various countries (e.g.7 markets in 6 countries for NYSE Euronext) in a simplified and less costly way,

• Provides Liquidity enhancement,

• Creates a broader Investors Pool and,……but not least,

• Reduces costs due to the unified technology platform and simplification of listing venues and ongoing obligations

So that …

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Maintain a steadfast commitment to our customers and maximize choice for issuers and users on a global scale

Maintain a steadfast commitment to our customers and maximize choice for issuers and users on a global scale

Utilize best in class technology and business practices to deliver significant operating leverage and superior financial

results

Utilize best in class technology and business practices to deliver significant operating leverage and superior financial

results

Continue to build the most global and technologically advanced marketplace for the benefit of our customers and

shareholders

Continue to build the most global and technologically advanced marketplace for the benefit of our customers and

shareholders

NYSE Euronext ‘s strategy may be defined as follows:


NYSE Euronext

“the development of stock exchanges”the nyse euronext merger 14 the emergence of a world leader...

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