March 15, 2011 7:52 pm

SIX market share slashed by rival platforms

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Switzerland’s SIX Group repeated its wish to stay independent, even as the operator of the Zurich bourse said its market share had been dramatically cut last year by the emergence of alternative trading platforms.

The group said on Tuesday that its average market share in Swiss blue-chip stocks has dropped from 84.9 per cent in 2009 to 70.6 per cent last year as multilateral trading firms took market share.

The group has turned its focus to newer sources of revenues such as financial services payments, distribution of information and post-trade services such as clearing.

Urs Rüegsegger, chief executive, ducked all questions about whether the proposed deal between Deutsche Börse and NYSE Euronext might put his market’s operations into doubt. In Switzerland, concerns have been raised particularly about Eurex, the derivatives exchange, given that Deutsche Börse’s planned merger partner owns Liffe, a London-based competitor.

“That bourse operators would consolidate is not exactly news for us,” said Mr Rüegsegger. In 2007, the then SWX Swiss Exchange announced plans to join forces with its clearing company and associated payment and data services operators. The combined entity, initially called Swiss Financial Market Services, was renamed SIX Group.

Mr Rüegsegger said Deutsche Börse’s plans offered opportunities for Eurex, Scoach and Stoxx, the three joint ventures owned by the Swiss and German groups. Eurex is a leading derivatives market, Scoach was created for trading structured products and Stoxx operates a family of market indices.

He said SIX could not comment, as it was not privy to Deutsche Börse’s detailed negotiations. Mr Rüegsegger admitted the contractual arrangements between Eurex’s two owners had provisions preventing ownership of competing businesses, but declined to go into detail.

Instead he stressed SIX Group’s breadth and financial strength, which left it well positioned to confront market developments and potentially grow via acquisitions.

Although the core Swiss equity trading business has not been expanded, and in fact come under pressure from new electronic trading platforms, SIX Group has made takeovers in card services and financial information. “We are in a good starting position,” he said.

Mr Rüegsegger said the Swiss stock market had tried to maintain competitiveness with new electronic rivals by improving its appeal to high frequency traders and through “proximity hosting”. Fees had been further reduced, and other services improved and expanded.

The comments come as SIX, owned by leading banks, announced that net profits last year dropped by 21 per cent to SFr173.6m. The fall stemmed from a SFr32.1m fall in income from financial investments, believed to be equity holdings. The group also took a SFr53.5m writedown on the assets of ISE, the US Eurex subsidiary on which SIX Group took an initial SFr45.4m writedown in 2009.

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