Euronext could be set for a number of M&A deals after the Dutch Finance Ministry lifted certain capital requirements, according to analysts at JP Morgan.
The research note from the bank stated the removal of the capital requirements last December by the Dutch government would allow greater optionality for return, and could encourage newly appointed CEO Stephane Boujnah to venture into the acquisition space.
Euronext, which operates equity and derivatives exchanges in Belgium, France, the Netherlands and Portugal, spun off from NYSE in the summer of 2014 following its acquisition by IntercontinentalExchange (ICE).
According to the note, trading volumes for Euronext’s derivatives contracts declined 22% year-on-year during the fourth quarter. It also said its outlook for trading volumes for the year is “uncertain” and “profitability in a given period will to a large extent be driven by market environment, we believe.”
However if the pan-European exchange group decides to go down the acquisition path, it would help it combat an increasingly fragmented market.