Supervision of a multi- jurisdictional operator : The Euronext Experience European Parliament, 14 December 2005, Strasbourg Olivier Lefebvre, Member of the Managing Board

2 Euronext at a glance Euronext Model Created in 2000, Euronext is the cross-border exchange : in four years, Euronext brought together Amsterdam, Brussels, Lisbon, Paris and Liffe exchanges Euronext’s open architecture is focused on its core activity: trading and listing financial instruments and disengaged from clearing and settlement activities Technological integration of trading platforms is the the basis of its confolidation process Multi-juridiction model : several home regulators Horizontal model : divested from post-trade activities Synergies : single trading platform single rule book single list Goal: Meeting Users needs (market efficiency, low costs and reduced fees)

3 1.Exchange fees decrease (Explicit trading costs) Passing synergies benefits to users 2.Reduced internal operating costs (Explicit trading costs) Savings on IT assets and human capital resources needed to access and monitor separate trading platforms Optimized trading organization 3.Increased liquidity (Implicit trading costs) Lower bid-ask spread, greater volume, lower volatility 4.Wider trading opportunities Larger set of directly tradable securities Direct access to all Euronext markets Increased cross-border trading … but regulatory costs stable & regulatory burden is a limit to the model Direct user benefits resulting from the integration of Euronext markets

4 ZXP A Multi-jurisdiction model : the case of equities B F NL Euronext « RuleBook 1 » Listed companies choose their jurisdiction of Listing Members choose one “preferred” entry point The Euronext regulatory model RM Eurolist Other regulated and non-regulated markets in various MS (and Alternext)

5 A Multi-jurisdiction model with only “home” supervisors Cooperation between 5 National Supervisors Organised Through a MOU: AFM, AMF, CBFA, CNVM, FSA Chairs Committee, Steering Committee, 5 working parties The Euronext regulatory model

6 Challenges to be won  Increase cooperation to solve division of competences  Information on listed companies: authority of listing and authority of the country of registration  Market Abuse Directive: authority of the territory where the action has taken place and authority of the regulated market where the financial instrument is admitted to trading  Suspension of trading on various venues in different Member States  Increase convergence in terms of supervisory compliance  Disparities in information and reporting requirements  Disparities in the way supervision is practiced in various countries  Specific legal environment at national level e.g. requirements for outsourcing  Different philosophy towards financial markets e.g. list of insiders of the Market Abuse Directive (pragmatic route versus detailed requirements)

7 Proposed action  Cooperation & coordination between regulators pushed to the greatest extent  A standard toolbox for regulators  Eliminate constraints limiting cross border integration  Strengthen cooperation mechanisms  Improve “Memorandum Of Understanding” Allow join approval process Removing differences between regimes on pre-approval or ex-post notification for changes or innovations Consolidated list of information

8 Proposed action  “coordinating regulator/supervisor” or “convening regulator/supervisor”  rather than a “lead” regulator  Cordinating/convening supervisor does not imply one regulator only can be organised around a college of regulators each supervisor coordinator for a specific portfolio  Effective cooperation  Delegation of task  Presemption of cooperation

9 Key requirements  Allow the Lamfalussy process to continue and to develop with appropriate accountability  Political impetus to foster cooperation between regulators  Possibility for the private sector to ask for cooperation between regulators

10