Cboe prepares for European stock market listings grab

Cboe Global Markets will try to lure companies to list on its markets in Europe, aiming to reverse a trend that has seen many companies desert the continent for the US.

The group, which runs the largest pan-European share trading venue, is preparing to take on companies such as the London Stock Exchange, Euronext, Nasdaq and Deutsche Börse, which dominate the market for primary listings. Cboe is aiming to launch listings in Europe from early next year.

Its move comes as Europe suffers from a drought of new public offerings and as companies such as Flutter, CRH and Ferguson give up their European listings for the deep capital pools of New York. British chip designer Arm will also list in the US instead of returning to the London market.

Officials in the UK and EU are seeking to overhaul their respective capital markets and listing rules in an attempt to make the continent more competitive and attractive for investors and new companies. European companies have raised just $2.9bn from IPOs this year, compared with $3.8bn over the same period last year, according to Refinitiv data.

“We came to the conclusion that from a capital formation perspective, there are gaps where a new, innovative listings exchange, thinking and operating in a different way, could truly add value,” Jos Schmitt, head of global listings for Cboe Global Markets, told the Financial Times. “Europe is one of the areas we want to focus on.”

The company has an exchange based in the UK and the Netherlands but is currently hiring for a director of corporate listings sales based in Amsterdam, according to a job advert on its website.

The focus of the role will be “attracting new public company listings for the Cboe Global Markets in the European Union”, it says. “We’re looking at both the UK and EU,” Schmitt said.

Ian White, analyst at Autonomous Research, said Cboe faced “a real uphill slog” to grab market share from Euronext. “I can’t see why as a prospective new issuer that a brand new exchange would be a good place for you to get visibility and interest in your shares, versus comfortably the biggest capital raising pitch in Europe.”

Cboe built its name in the US trading options like the Vix volatility index and runs Europe’s biggest markets for secondary trading of shares, but has little experience in initial public offerings.

One exception is at Neo, a Canadian venue bought by Cboe last year, which has about 60 primary listings. Schmitt said it hoped to replicate that success in Europe.

“Our focus will be on earlier stage growth companies, for which there is investor interest across the globe and where incumbent exchanges are not providing what it takes to make them successful,” said Schmitt. 

The company aims to build a global network of listing venues and to provide companies with liquidity across the world, regardless of which country they choose to list in.

White added that Cboe was “becoming a real nuisance for the continental European exchanges”, having eaten away at their market share in equities trading. It holds a 25 per cent share of the European equities trading market, compared with Euronext’s 24 per cent share, since the start of May. Europe’s national stock exchanges used to have a near monopoly on trading until regulation allowed competition.

White added that while Cboe would struggle to eat into Euronext’s share of European listings, its move into public offerings may make listing prices more competitive and give Euronext’s “customers a stick to beat [it with] if they’re increasing fees by double digits”.