Chicago-based Cboe Global Markets Inc. has entered into a definitive agreement to acquire EuroCCP, a pan-European equities clearing house. The transaction will bring together two companies that have long championed competition, open access and clearing interoperability in Europe. Additionally, Cboe's ownership of EuroCCP is expected to provide opportunity to pursue the development of equity derivatives trading and clearing capabilities in the region, subject to regulatory approvals.
The two companies are closely aligned on a vision to further expand the benefits of Amsterdam-baesd EuroCCP's open-access model serving other exchanges and trading venues. EuroCCP currently clears trades for 39 trading venues, which represent close to 95 percent of Europe's equity landscape, making it the most connected equity central counterparty in the region. EuroCCP clears on average between four to five million trade sides daily.
"Cboe's planned acquisition of a leading equities clearing house in Europe is an important step in our growth strategy for the region,” Cboe Global Markets Chairman, President and CEO Ed Tilly said in a statement. “We believe ownership of EuroCCP will enhance our current European equities business, while providing opportunities to potentially diversify our business, including trading and clearing derivatives, in the future."
EuroCCP CEO Cécile Nagel added: "Cboe is a staunch advocate of open access and interoperability, values which EuroCCP has long promoted, with an established track record of servicing clients globally and providing innovative products across numerous asset classes. We believe this transaction positions EuroCCP for continued success and we look forward to becoming part of the Cboe group. EuroCCP remains committed to offering a best-in-class service with leading client satisfaction."
While the company expects its plans to acquire EuroCCP and pursue equity derivatives trading and clearing in Europe to generate positive financial returns longer-term, these initiatives are expected to be dilutive to earnings over the next three to four years. The transaction, which Cboe plans to fund with cash on hand, is expected to close in the first half of 2020, pending the receipt of required regulatory clearances and the arrangement of a supporting liquidity facility at the EuroCCP clearing entity level.
PJT Partners acted as exclusive financial adviser to EuroCCP, Allen & Overy acted as exclusive legal counsel to EuroCCP and Greentarget acted as communications strategy adviser to EuroCCP on the transaction. Cboe's legal counsel on the transaction was Macfarlanes LLP and Norton Rose Fulbright LLP.