NYSE is Ready to Take Competition Head-On in Spain

NYSE Euronext (NYSE:NYX) is all set to launch a promotional pricing strategy for Spanish stocks in an effort to increase its foot print in a market dominated by Spain’s Bolsas y Mercados Espanoles (BME.MC). NYSE Euronext operates exchanges in France, the Netherlands, Belgium and Portugal and is looking to gain ground in Spain through a promotional fee on its pan-European trading platform, NYSE Arca Europe. ^[1] NYSE Euronext is the operator of the largest stock exchange in the world and competes with Nasdaq OMX (NASDAQ:NDAQ) and CME Group (NASDAQ:CME).

See our full analysis for NYSE Euronext

Spain’s incumbent exchange, Bolsas y Mercados Espanoles, has a near monopoly in trading on its national stocks despite attempts by the European regulators to introduce competition in share trading in 2007. NYSE’s entry into this market will only make the landscape more competitive. Before NYSE, Bats Chi-X Europe, Europe’s largest alternative exchange platform, also implemented a price promotion in the most liquid Spanish stocks which helped it gain a 7% market share in February 2012. ^[1]

NYSE started its European stock trading platform, Arca, in March 2009 but has struggled to build significant levels of activity. Last month, it had an overall market share of less than 0.1% and conducted trades worth EUR 545 million, including EUR 100,000 in Spanish stocks. We estimate that NYSE’s European cash trading volume will reach 648 million by 2018 from 440 million in 2011.

We have a price estimate of $33.84 on NYSE Euronext’s stock, about 15% above its current market price.

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1. Financial News: NYSE Euronext Ups Ante In Spanish Fee War, Feb 24, 2012, WSJ [↩] [↩]