Any global exchange operator would need to ditch ownership of its clearing and settling operations as consolidation looks set to increase, an executive of Euronext said on Monday.
"Becoming global means becoming horizontal," said Peter Bezemer, Chief Executive of the London division of pan-European exchange Euronext, told delegates at a stock exchange conference in Dubai.
"You need to abolish the vertical silo." Nasdaq Stock Market's bid for the London Stock Exchange, though rejected, has ushered in an age of global consolidation among exchanges.
The operators are under pressure to merge to boost volumes in order to build new trading platforms and lower transaction costs.
Euronext, which does not fully own its clearer LCH.Clearnet - the so-called 'horizontal' model - has held merger talks with Frankfurt-base Deutsche Boerse in recent months as the likelihood of any deal with the London exchange ebbed.
Deutsche Boerse operates a 'vertical silo', fully owning its clearing business.
As in the case of Deutsche Boerse's last attempt to merge with London, regulators are likely to raise concerns that any merged entity's ownership of its clearing house places customers at a disadvantage because it ties them to the same clearer and potentially to higher costs.
Bezemer would not comment on any developments between the Paris-based bourse and its German rival, but added: "We are ahead of others in terms of consolidation."
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