NYSE Euronext has provisionally agreed to take ownership of Atos Euronext Market Solutions, a joint venture operation set up in 2005 by Atos Origin and Euronext to run the exchange’s European trading platforms.
Should the buy-up go through as planned, NYSE Euronext – which was created in April this year by the merger of NYSE Group and Euronext – will re-acquire ownership of the NSC cash trading and Liffe Connect derivatives trading platform. It will also own take over all the management and development services surrounding these platforms.
And it will gain control of AEMS’s third-party exchange technology business, with the exception of two third-party businesses – Clearing & Settlement and Capital Markets – that Atos is set to acquire.
The two-part deal would see NYSE Euronext pay about £200m to Atos Origin for its acquisitions, while Atos Origin would pay about £10m to a NYSE Euronext-owned AEMS for its purchases.
Both parties said the removal of these cross-holdings would allow each of them to “focus on their core businesses, given recent trends in their respective industries”.
But they also both said they intended to “extend their historical relationship”, with Atos Origin becoming NYSE Euronext’s preferred supplier for integration and outsourced IT services.
What the firms have termed the “re-internalisation” of their technology businesses should be completed by the end of the summer in 2008, they said.
Jean-François Théodore, deputy CEO of NYSE Euronext, said: “Insourcing our technology gives us greater flexibility and a competitive advantage in a fast-moving exchange landscape where technology is key.”
He said bringing the expertise of “ a large number of highly skilled IT personnel back in-house” would enable the exchange to better deliver on its commitments to provide customers with “more efficient trading services and to deliver IT synergies to our shareholders.
“We will also be able to continue our strategy of selling our state-of-the-art trading platforms to more exchanges around the world,” he added.
It is only a month since NYSE Euronext said it was contemplating insourcing its IT. The move is just the latest big technology play by the exchange, which in October confirmed the abrupt departure of Tarak Achiche as the exchange’s head of IS.
Earlier this year NYSE Euronext also announced that it would advise the Tokyo Stock Exchange on several key IT areas, under a new agreement.
The merger of NYSE Group and Euronext to create NYSE Euronext has always been premised on dramatic cost savings being made through IT consolidation. At the heart of the business case for the merger is a three-year plan to save £136m a year through IT integration.
AtosEuronext Market Solutions always looked like the main technology supplier that would be charged with delivering the systems integration and accompanying savings, but analysts have generally doubted that the timetable for IT integration savings is realistic.
TowerGroup analyst Ralph Silva said last year that the timings looked “extremely optimistic” to him, and suggested that five to seven years to rationalise platforms might well be needed.