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Press review

2011 | 2010

Equinox in the news - 2012

Banking

“Banks—who needs ‘em?”, by Tiphaine Thuillier, Neon, April?May, 2012

“The risk with peer-to-peer lending is that investors will get too involved,” said Equinox Consulting’s Sophie Madet, author of a note on peer-to-peer lending. “However, most people stay focused on their objectives and use peer-to-peer lending as a profitable way to help those in need, and not to make new friends. […] Since borrowers have made a public commitment, they are more motivated to keep their word; someone who doesn’t pay back a loan risks damaging his reputation and finding himself marginalized, which would make it nearly impossible to borrow money in the future.”

“Customers exasperated by bankers’ hard-sell approach,” by Sandrine L’Herminier, Le Monde Argent, February 8, 2012

“Take insurers, for example. Some of them offer asset-based financing, which is basically a high-end loan secured by holdings in mutual funds. It’s a clever way to ensure customer loyalty,” said Equinox Consulting Managing Partner Stéphane Court.

“French banks hit the brakes on consumer lending,” by Anne de Guigné, Le Figaro Economie, January 19, 2012

“France’s new Lagarde law will affect Cofinoga more than any other French bank because Cofinoga grants more revolving consumer loans than any of its peers,” said Equinox Consulting Managing Partner Stephane Court.

Regulations

“Pan-European clearing houses face up to new regulations,” by Séverine Leboucher, Revue Banque, January 2012

“The alternative exchanges springing up across Europe needed pan-European clearing houses suited to their low-cost business model,” said Gaspard Bonin, Managing Partner at Equinox Consulting. “However, the operational and financial realities of pan-European clearing have raised some issues. To be truly interoperable the clearing houses must make their risk models compatible—but these models are at the core of their business. [...] And, as opposed to transactions involving listed assets, for OTC derivatives the parties involved can chose their own clearing house for each transaction. Japan passed a law on OTC derivatives clearing in May 2010 and Hong Kong and South Korea are hammering out their versions. So we expect to see a lot of new clearing houses pop up in Asia.”

“Banks bolster their image with CSR: interview with Sophie Madet, Partner at Equinox Consulting,” L’Agefi Hebdo, January 12–18, 2012

“We recently surveyed around a dozen French banks. All of the respondents stated that they had taken typical CSR measures to improve gender equality and promote the employment of disabled people and socially-disadvantaged young adults. [...] Our survey also showed that banks act mainly through their hiring policies and branch outreach initiatives. While image is certainly a factor, these banks do not view CSR as merely a marketing scheme. Their CSR policies stem from a genuine concern and are starting to bear fruit. However, our survey revealed that banks are having trouble getting employees involved in initiatives to teach the socially disadvantaged about the basics of personal finance. It’s ironic considering that these same employees have indicated there is real demand for such programs. HR managers can leverage this to boost employee motivation and involvement.”

Financial Markets

“London poised to gain from new derivatives regulations,” by Nicolas Madelaine, Les Echos, April 12, 2012

According to Gaspard Bonin, Managing Partner at Equinox Consulting, “In OTC transactions, LCH.Clearnet’s Paris office was a first-mover in CDS but LCH.Clearnet’s core business, SwapClear, is based in London. […] London still leads the international race.”

“A second wind for NYSE Euronext,” by Thomas Carlat, L’Agefi Hebdo, April 12?18, 2012

“NYSE Euronext’s cost-cutting plan is another example of the drive by incumbent exchanges to lower their costs to compete with alternative platforms,” said Jean de Castries, CEO of Equinox Consulting. […] “NYSE Euronext’s move into derivatives clearing makes perfect sense, since it gives the company a foothold in OTC derivatives clearing—a market that should boom once the new regulations are passed.”

“LSE regains the upper hand on clearing houses,” by Christel Fradin, La Tribune, March 9, 2012

“The LCH.Clearnet acquisition gives LSE a stake in promising markets like OTC derivatives clearing. […] LCH.Clearnet has a 50% share of the interest rate swap market as well as a CDS clearing platform that could pose a major threat to rivals like ICEClear—if LCH.Clearnet can attract enough US and UK clients,” said Jean de Castries, CEO of Equinox Consulting. “NYSE Euronext has lost a battle in clearing but not the war, since it could still look into the feasibility of setting up a clearing joint venture with Deutsche Börse.”

“Turmoil surrounds Deutsche Börse-NYSE Euronext merger,” by Guillaume Benoit, Option Finance, January 30–February 5, 2012

“The merger would create the biggest stock market in Europe with a 25% market share, vs. just 15% for NYSE Euronext alone,” said Gaspard Bonin, Managing Partner at Equinox Consulting. […] “On the one hand, EU antitrust regulators are afraid that the merged entity would crowd out smaller exchanges in this niche, despite Deutsche Börse’s offer to open up its Eurex clearing platform. On the other hand, proponents of the deal claim that the European Commission is taking into account only the listed derivates market, whereas the majority of derivatives are traded over the counter. They also contend that the EC is looking at a very narrow market geographically.”

“LSE well on track to acquire LCH Clearnet,” by Pascal Besses-Boumard, LaTribune.fr, February 15, 2012

“The potential wins are huge. LCH Clearnet possesses numerous strategic advantages for OTC clearing, a market that could soon swell to colossal volumes. LCH Clearnet already handles interest rate swaps via its SwapClear platform, which boasts a mouth-watering 50% share of this market, as well as a strong CDS business,” said Jean de Castries, CEO of Equinox Consulting. […] “NYSE-Euronext would also like to get its hands on LCH Clearnet, since it needs to find a clearing platform for both cash and derivatives by 2013. The exchange operator will probably make a bid if talks with LSE fall through. LCH Clearnet is highly coveted now that both US and EU regulators plan to require that all OTC derivatives transactions pass through a clearing house. The challenge will be to persuade LCH Clearnet’s shareholders, since they are also platform users. They are the ones who blocked the merger with Markit a few months ago, and they will make the final decision on whether to go forward with LSE.”

“Securities exchange mega-mergers face strong headwinds,” by Sophie Deviller, AFP Economique, February 1, 2012

“Alternative exchanges have acquired considerable market share and help maintain market competition. They now need to expand and exploit synergies to make sure they survive over the long-haul,” said Gaspard Bonin of Equinox Consulting. “Revenue has plateaued in the West, so growth is likely to come increasingly from Asia and emerging markets.”

“NYSE Euronext and Deutsche Börse bet it all,” by Thomas Carlat, L’Agefi Hebdo, January 26, 2012

“This merger is not the last opportunity in the European stock market; there are other options,” said Jean de Castries. “The game won’t necessarily be over if the merger fails. [...] But they need to act quickly because LSE already has a head start. [...] If the proposed tie-up with Deutsche Börse falls through, NYSE Euronext will probably set its sights on LSE since the British exchange operator needs to expand and hasn’t made any major acquisitions since Borsa Italiana. Another possibility would be to create a joint venture with Deutsche Börse for clearing operations. In any case, if the merger fails, the players will simply have to shuffle up and deal again.”

Asset Management

“Flexible investment strategies gain ground,” by Xavier Diaz, L’Agefi Hebdo, April 12?18, 2012

“Investors today are looking for counter-cyclical, asymmetric strategies that can limit losses during a market downturn but capture all the gains from a market upturn,” said Phoumin Phieu, head of asset management at Equinox Consulting. “Funds of funds can meet two of investors’ needs for flexible portfolio management: diversification of asset classes and asset allocation by fund managers.”

“Large asset managers withstand an efflux of assets,” by Sandra Sebag, Option Finance, March 5–11, 2012

“There are a myriad of funds out there that no longer respond to clients’ needs,” said Jean-Baptiste Coiffet, Partner at Equinox Consulting. “Funds with low levels of assets under management are not profitable; the market needs to be streamlined. […] A lot of asset management firms offer funds that are essentially the same, and clients have a hard time understanding why one might be better than another. So a streamlined product line-up would make investment choices much clearer for clients.”

Equinox in the news - 2011

Banking

“Traditional banks venture out into the net,” Agnès Lambert, Le Monde Argent, February 19, 2011

“Retail banks have realized that they need to adopt a multi-channel approach and offer online services. But they don’t plan to move into the discount banking space (like Boursorama and Fortuneo) because they don’t want to cannibalize their existing customer base by offering lower prices,” commented Stéphane Court, CEO of Equinox Consulting.

“Preparing for unpredictable risks now possible,” by Valérie Riochet, L’Agefi Hebdo, September 8–14, 2011

“Under the new Basel 3 requirements for investment banks and the new UCITS IV requirements for asset management firms, fund managers will now have to incorporate stress tests into their VaR calculations by applying a shock scenario to all variables. This means they will migrate from a traditional VaR to a stress VaR,” said Jean de Castries, CEO of Equinox Consulting.

New regulations

“MiFID II, a shaky comprise,” by Fabrice Anselmi, L’Agefi Hebdo, November 3–9, 2011

“Another improvement to MiFID is better synchronisation with EMIR [European Market Infrastructure Regulation] on issues such as the double reporting of transactions and the clearing operations for MTFs and OTFs, which will be required to use a central clearing agent for all transactions above a certain amount in order to reduce counterparty risk,” said Jean de Castries, CEO of Equinox Consulting.

“Controversy surrounds the removal of the UCITS classification from complex ETFs,” by Thierry Serrouya, La Tribune, October 24, 2011

According to Jean-Baptiste Coiffet, head of the asset management practice at Equinox Consulting, such a move would make fund distribution much more complicated, eradicate the idea of an EU passport, and require that funds and fund managers obtain approval from a slew of local regulators. This would significantly hinder the expansion of ETFsg.

“MiFID II tightens market regulation in Europe,” Option Finance, October 24, 2011

“The proposed changes to MiFID appear to be quite ambitious and comprehensive, providing for greater market transparency and regulation,” said Gaspard Bonin, Managing Partner at Equinox Consulting. “Some measures, like the introduction of a consolidated tape containing all market data, would be difficult to implement technically.”

“Brussels pushes for greater market transparency,” by Clément Lacombe, Le Monde Week-End, October 22, 2011

Jean de Castries, CEO of Equinox Consulting, said: “All platforms will be placed on equal footing. [...] Over 90% of orders placed are subsequently cancelled; high-frequency traders often place thousands of orders to get a feel for the market and influence it in some way. They then cancel the orders and make money on the artificial price fluctuations that they themselves had created.”

“Regulatory reform of the derivatives market advances at a snail’s pace,” Angèle Pellicier, Option Finance, June 21, 2011

“The US Congress is studying an amendment that would postpone implementation of the regulation until end-2012, and in late May several major market associations asked the CFTC for additional time,” explained Gaspard Bonin, Managing Partner at Equinox Consulting. “So the regulation is unlikely to go into effect before the end of the year, especially since US lobby groups want to put off its implementation for as long as possible. They don’t want to be the first to have to bear the new regulatory burden.”

Financial markets

“MF Global’s bankruptcy underscores the importance of clearing houses,” by Solenn Poullennec, L’Agefi, November 10, 2011

“Clearing houses offer an additional layer of security because they separate the end client from the collateral in a transaction,” said Jean de Castries, CEO of Equinox Strategy. “If a clearing member goes bankrupt, the collateral deposited by an end client can be identified and transferred accordingly.”

“OTC derivatives market still haunted by uncertainty,” by Frédérique Garrouste, L’Agefi Hebdo, October 20–26, 2011

“The deadline is fast approaching, yet there remains a great deal of uncertainty about the new reforms,” said Gaspard Bonin, Managing Partner at Equinox Consulting. [...] “We still don’t know what clearing house will be involved, what recognition other clearing houses will accord the various regulators, or what cross-border implementation will look like.”

“LCH.Clearnet ready to accept gold as collateral,” by Solenn Poullennec, L’Agefi, October 7, 2011

“Gold has one clear advantage over other asset classes: no credit risk. Gold has a continuously quoted price, is traded on a highly liquid market, and is a counter-cyclical investment—particularly attractive during financial crises,” said Jean de Castries, CEO of Equinox Strategy. [...] “As a result of the G20’s commitment on OTC derivatives, a lot of OTC transactions will now have to pass through clearing houses, meaning there will be a huge need to pledge assets as collateral.”

“London attacks the ECB on clearing,” Revue Banque, October 2011

“The ECB wants greater oversight on clearing houses, which play a key role in protecting against systemic risk,” said Jean de Castries, CEO of Equinox Consulting.

“LSE joins the battle for post-market integration,” by Tan Le Quang, L’Agefi, September 5, 2011

“LSE has not been very successful with its ‘vertical silo’ model in the past,” said Jean de Castries, CEO of Equinox Consulting. “The British exchange operator had trouble integrating Borsa Italia’s clearing house, CC&G [Cassa di Compensazione e Garanzia]. But the acquisition of LCH.Clearnet would expand LSE’s size significantly, enable it to exploit synergies with CC&G, and, thanks to LCH.Clearnet’s SwapClear subsidiary—a global leader in interest rate swaps clearing—allow it to offer a full range of new services.”

“Stock market operators face uncertainty over equity trading costs,” by Christèle Fradin, La Tribune, July 29, 2011

“NYSE Euronext-Deutsche Börse has an over-30% share of the European equity trading market, well ahead of London Stock Exchange (25.9%) and the combined Chi-X-BATS group (22.8%) if the merger goes through. So, the European equity market is highly concentrated with three operators accounting for over three-fourths of the equity traded,” said Gaspard Bonin, Managing Partner at Equinox Consulting. [...] “Their market shares have hardly budged these past few months, and Chi-X and BATS probably have their hands full dealing with UK anti-trust regulators and new initiatives targeting derivatives. A major change in liquidity would be needed to prompt a move by historical stock market operators.”

“Derivatives: The plot thickens,” Frédérique Garrouste, L’Agefi Hebdo, June 23–29, 2011

“Politics is playing an increasing role in the discussions, mainly because Republicans in the US are pushing for lighter regulations,” remarked Gaspard Bonin, Managing Partner at Equinox Consulting. “LCH.CIearnet needs to attract some of the five or six main [US] broker-dealers that account for four-fifths of the CDS [credit default swap] market… Some banks are already looking at how they can unwind their at-risk positions in different types of derivatives, which is tricky since they have to take into account the correlations between different products. This could prompt some buy-side customers to use a bank for their clearing, giving them a key advantage over the competition… Following the request for proposals issued by the ISDA [International Swaps and Derivatives Association], the US operator plans to exploit repositories of interest rate, equity, and credit derivative trades. That’s why discussions are underway to create a joint supervisory board; European regulators want to have a say in the way that these trade repositories operate.”

“Traditional vs. alternative exchanges: The battle is on,” Audrey Spy, Option Finance, April 11, 2011

“Traditional stock exchanges did not take the threat posed by MTFs seriously enough at first, and they have been slow to respond,” said Gaspard Bonin, Managing Partner at Equinox Consulting. “They only became aware of these new competitors as the MTFs gradually ate away at their market share… Alternative trading platforms are still four or five times cheaper than traditional exchanges despite considerable efforts by the latter to lower their prices… Some exchanges have started to focus on CFDs (contracts for difference), but they are a step behind their US peers.”

“Stock exchanges: Why New York needs Frankfurt,” Thomas Carlat, L’Agefi Hebdo, February 17–23, 2011

According to Jean de Castries, CEO of Equinox Strategy , “This merger clearly demonstrates the triumph of the Frankfurt stock exchange’s ‘silo’ business model [of full integration along the trading chain]. Today, stock exchanges are racing to secure the fastest and most powerful technology—which obviously entails heavy investments. So they are looking to spread these IT costs over large transaction volumes.”

“A wave of consolidation hits global stock exchanges,” Fabio Marquetty, La Tribune, February 10, 2011

According to Jean de Castries, an analyst at Equinox Consulting , the consolidation process is well underway. Stock exchanges are merging in order to cut costs, share technology, and attract major international issuers through the ability to handle large volumes of cross-Atlantic trades. Mr. de Castries also pointed out that traditional stock exchanges do not simply generate revenue by executing orders. Their listing activity is also highly strategic, in that it has higher margins and offers more added value than order handling—which has become a commoditized business.

“Alternative platforms (MFTs),” Julien Tarby, Le Nouvel Economiste, February 17, 2011

“Before MiFD went into effect on November 1, 2007, EU member states could require that all transactions passed through a single trading platform,” explained Gaspard Bonin, Managing Partner at Equinox Consulting, a banking industry consultancy. “When MTFs first hit the market their transaction fees were ten times less than those of traditional exchanges; today they are still an average of four times less. Thanks to this pricing pressure, and a gradual response from traditional exchanges, transaction fees have fallen by around 5% since 2007… Another factor to consider is the scope of the securities traded. MTFs initially had an advantage because they handled pan-European trades, while traditional exchanges dealt mainly with securities from their own countries.”

“TMX gives the London Stock Exchange a bridge across the Atlantic,” Violaine Le Gall, L’Agefi, February 10, 2011

“The foreign takeover of a country’s stock exchange is often viewed as loss of sovereignty. Therefore, the [TMX-LSE] merger is likely to ruffle a few feathers in Canada, similar to the furor caused in France when NYSE acquired Euronext in 2007,” said Gaspard Bonin, Managing Partner at Equinox Consulting.

“London and Toronto set their sights on commodities,” Danièle Guinot, Le Figaro Economie, February 10, 2011

“The London Stock Exchange has long been looking for a cross-Atlantic tie-up to rival NYSE Euronext. Don’t forget that most big-volume traders are international investors. Also, stock exchanges need to achieve a critical mass to be able to afford the increasingly complicated IT systems used in trading,” remarked Jean de Castries, CEO of Equinox Strategy .

“Chi-X gains ground on the CAC 40,” Valérie Nau, Option Finance, January 31, 2011

“One of the reasons why Chi-X is so successful is that it has been around for much longer than the other alternative platforms, so it has been able to build up a loyal customer base,” explained Jean de Castries, CEO of Equinox Strategy . “Transaction fees for alternative platforms are around 0.09 basis points, compared with around 0.44 basis points for traditional exchanges: NYSE Euronext charges 0.41 basis points, LSE charges 0.47 basis points, and Deutsche Börse charges 0.55 basis points… Traditional exchanges have revamped their IT systems to respond to the technology-driven competition from alternative platforms; NYSE Euronext’s UTP (Universal Trading Platform) and LSE’s acquisition of Millennium IT are just two examples. Chi-X’s success poses a major challenge for the incumbents.”

“Chi-X Europe overthrows NYSE Euronext in Europe’s top spot,” La Correspondance Economique, January 25, 2011

According to Jean de Castries, an analyst at Equinox Consulting , Chi-X has been successful because of its first-mover advantage over other MTFs like BATS Europe and Turquoise (which the London Stock Exchange acquired last year), as well as its aggressive pricing policy that let it quickly stake a place in the market. Mr. de Castries himself is impressed by how quickly the alternative platform has grown. He sees a genuine triumvirate emerging with LSE, NYSE Euronext, and Chi-X; it will be interesting to see what happens with other traditional exchanges like Deutsche Börse .

Asset management

“Henderson steps into the asset management consolidation ring,” Stéphanie Salti, L’Agefi Hebdo, January 20–26, 2011

“The [Gartmore] acquisition is emblematic of the restructuring taking place across the asset management industry as firms seek to increase their size and business volumes,” noted Jean de Castries, CEO of Equinox Strategy . “We expect to see a series of cross-border acquisitions as companies strive to establish a presence in all three major regions: Europe, the US, and Asia… Another new trend in the industry is efforts by firms to lower their execution costs, such as BlackRock ’s development of a proprietary trading platform for its fund managers to execute orders for their clients.”

Consulting

“The banking consulting market rebounds in 2010,” Cécile Dubois, La Lettre du Conseil, January 2011

“Most of our consulting work right now deals with post-acquisition integration. These are typically long-term (12- to 18-month) projects that are crucial for banks and which draw on multiple consulting disciplines (strategy, management, and IT). We help companies implement mergers in-the-field, exploit synergies, and revamp their processes,” explained Jean-Louis Dufloux, Managing Partner at Equinox Consulting.

Equinox subsidiaries

“International retail banking chains forge hierarchies,” Antoine Landrot, L’Agefi, June 9, 2011

“The recent financial crisis and new Basel 3 liquidity requirements have prompted banks to focus more on retail banking. And industry observers tend to lump western Europe together as a single national market,” commented Bruno Establet, Partner at Selenium, Equinox Consulting’s international division. “Considerably less money is spent on them than before the crisis and target markets are now saturated and have high entry costs... Banks wanting to come in late in the game will have to develop cost-efficient penetration strategies that leverage new distribution channels, partnerships with local players, and alternative banking models like online baking and mobile branches.”

HSBC is the most global retail bank,” Alexandre Maddens, La Tribune, April 4, 2011

According to Bruno Establet, Partner at Selenium Consulting, “Some retail banks were able to implement international expansion strategies at just the right time, while others moved too late and had to play catch-up. French banks’ international expansion is largely influenced by the country’s geographic location and colonial past. The same holds true for Spanish banks, which have a strong foothold in Latin America, and for British banks like Barclays, which has a strong presence in sub-Saharan Africa.”

Equinox in the news - 2010

Islamic finance

“Islamic finance makes steady inroads into the French market,” L’Agefi Actifs, May 21–27, 2010

“Unlike conventional finance that seeks to minimize the risk associated with a given transaction, Islamic finance is based on asset transfers and exposure to risk,” explains Christophe Complainville, Founding Partner at Selenium Consulting. “Islamic banking services could appeal to a quarter of France’s six million Muslims, investors looking for ethical and socially responsible investments, and customers seeking lower fees (when the fees are indeed lower).”

“Special feature on Islamic finance: A fresh impetus in 2010,” Soraya Haquani and Thierry Zakhia, L’Agefi Hebdo, April 1–7, 2010

“For now, Islamic finance’s beachhead into France is investment banking,” said Christophe Complainville, Partner at Selenium Consulting (an Equinox company). “Islamic retail banking is still a touchy subject and French banks have not really moved into that area. An Islamic bank wishing to penetrate the French retail banking market faces a considerable challenge, since the entry costs are high. We know of a few French banks that offer efficient services, but competition among them is fierce. Gaining market share in this climate will be a tough battle.”

“Islamic finance: Equinox Consulting predicts up to 700 branches in France within the next 15 years,” Banques Hebdo, February 26, 2010

Islamic retail banking could have as many as two million potential customers in France, according to Christophe Complainville, Partner at Selenium Consulting, an Equinox Consulting subsidiary specialized in international distribution strategies.

Senior workers

“Older employees a challenge for banks,” Sarah Delattre, L’Agefi Hebdo, January 28–February 3, 2010

“It would be a mistake to let motivation wane among older employees, given what’s at stake,” said Grégoire Forbin, Partner at Equinox Consulting, a change management consultancy. “These people need special programs, like those frequently used for new graduates or high-potential employees.”

Banking

“Banks innovate to woo customers back into branches,” Benjamin Jullien, La Tribune, December 3–5, 2010

“One of the main challenges facing French banks today is the shift away from traditional branch banking,” remarked Stéphane Court, CEO of Equinox Consulting . “Due to the expansion of online banking and automated tellers, and the trend towards outsourcing certain advisory services to call centers, retail customers no longer have the same close relationships they once had with their bankers. So now retail banks are trying to lure customers back into branches… One strategy is to revamp their existing branches to stand apart from the competition, because for a while all the branches were starting to look the same… It’s a good way to win new customers since opening a new branch successfully in France is very difficult; there is already one on pretty much every corner.”

“Traditional banks fight back,” Interview with Stéphane Court, CEO of Equinox Consulting , Investir Magazine, March–April, 2010

“Traditional banks are facing new pressure with the expansion of online banks. They have seen that their young, internet-savvy customers rarely visit brick-and-mortar branches, and have developed online services to retain such customers. But the problem with their business model is that their online banking fees are often similar to their branch fees—assuming, incorrectly, that easy online banking is enough. However customers typically seek the lowest fees. Currently, only LCL offers lower fees online (through e-LCL) than in its branches, as well as longer opening hours. Traditional banks must learn how to operate a branch channel alongside an online channel—with differentiated fee structures—if they want to hold onto their customers.”

Interview with Stéphane Court, CEO of Equinox Consulting , Revue Banque, May 2010

“The real issue is the difference between the fees charged by banks and the value perceived by customers… Traditional banks are seeing two complementary trends: increasingly differentiated prices based on banking profiles; and expanded customer loyalty programs with benefits that include lower fees.”

“Bank branches of the future,” LaTribune.fr, May 15, 2010

“Barclays’ branch-in-an-apartment concept allowed the bank to expand its regional coverage with limited investments, and with only one manager at start-up—as opposed to the three or four employees needed at conventional branches,” said Stéphane Court, CEO of Equinox Consulting , a consultancy specialized in retail banking.

Financial markets

“BATS-Chi-X merger threatens to upend the European hierarchy,” Christèle Fradin, La Tribune, December 24–26, 2010

“The announced merger—which remains to be finalized in a concrete agreement—is a setback for Nasdaq OMX, which in any case had to wind down its own alternative trading platform,” explained Jean de Castries, CEO of Equinox Strategy . “A takeover by a traditional stock exchange would signal an end to the price war, but a tie-up between BATS and Chi-X would mean that the battle wages on.” The two platforms’ shareholders could reap other benefits as well: “They could pool their investments to keep the platforms alive, since these platforms have not yet proven they can generate significant financial returns.” For Mr. de Castries, this potential merger marks the first step towards a restructuring of the securities exchange market; the second step will likely come from clearing.

“The European stock exchange battle heats up,” Anne de Guigné, Le Figaro.fr, December 24, 2010

“Today, highly-specialized traders can operate in the space of a microsecond. This technological barrier threatens to discourage non-financial institution investors, and makes it more difficult for regulators to oversee the markets,” said Jean de Castries, CEO of Equinox Strategy

“Securities exchange competition remains stiff in 2010,” Christèle Fradin, La Tribune, December 17–19, 2010

“The market shares of stock exchanges appear to be frozen,” noted Jean de Castries, CEO of Equinox Strategy . “The revised MiFD should introduce more regulatory restrictions for regulated alternative platforms (MTFs), and consequently spark a wave of M&A deals… We didn’t see any major new MTFs enter the market in 2010, but rather saw the beginning of a trend that looks set to continue in 2011: banks offering MTFs alongside their trade matching systems. At this point it is difficult to determine the effect that this trend has had on volumes. But since it’s hard to measure the exact size of crossing networks, the likely shift of volumes to the new MTFs will allow for greater visibility.”

“Société Générale teams up for custody services,” Ninon Renaud, Les Echos, December 14, 2010

“A handful of players already provide custody services for mid-sized banks. Société Générale Securities Services and Oddo offer attractive prices, but for the short term we don’t see a major influx of customers,” remarked Gaspard Bonin, Managing Partner at Equinox Consulting. “The new company created from the merger of Crédit Agricole Asset Management and Société Générale Asset Management, called Amundi, could steal away some of the business that SGAM previously brought to SGSS.”

“‘We need commodities derivatives,’ insists Serge Malka, Partner at Equinox Consulting,” Les Echos, September 22, 2010

“The call for commodities derivatives is driven by a valid reason. Many transactions and non-financial institution traders are not overseen by a securities regulator, creating both individual and collective risks that are considerably greater than the risks on financial derivatives,” Serge explained. “Today, farmers and manufacturers in Europe have a hard time finding futures contracts to hedge their potential losses. The new milk exchange is not scheduled to open until October 18, and it will offer considerably less liquidity than the existing European exchanges for wheat and corn… The situation is very different in the US, which should prompt European authorities to encourage—rather than hinder—the development of commodities derivatives, whether listed or OTC . If safeguards are needed, like position limits or restrictions on exemptions, then we should launch a major communication and information campaign so that farmers and manufacturers can better manage their risks and embrace, rather than run away from, commodities derivatives.”

“More reshuffling in the asset management industry,” Sandra Sebag, Option Finance, September 20, 2010

“Over the next few months, large European banks will have to decide whether to divest their asset management operations or to double-up their efforts and make them more profitable,” said Jean de Castries, CEO of Equinox Strategy . “Today, an asset management business needs costly IT skills and equipment to be successful. In France, for instance, Natixis has announced that it plans to acquire a European asset management company in order to beef up its operations in this area. On the other hand, Italy’s Unicredit has announced plans to sell its asset management subsidiary Pioneer Investments.”

Finance function during a crisis

“Finance departments focus on processes and guidance during a crisis,” Cécile Dubois, La Lettre du Conseil, March 2010

“A major concern for banks’ finance departments is the regulatory changes introduced by Basel II, particularly in terms of managing liquidity. We have seen many more requests for consulting services related to this topic than to the turbulent economic climate. As a result we have carried out numerous system-oriented projects designed to recover complicated data,” said Jean-Louis Dufloux, Managing Partner at Equinox Consulting .

Stress tests

“Stock market insight: Stress tests give an indication of bank robustness,” Interview with Jean-Louis Dufloux, by Guillaume Bayre, Capital.fr, July 19, 2010

“The advantage [of stress tests] is that they provide data points for assessing banks’ financial positions according to uniform criteria. Institutions that pass the stress tests and prove to be particularly robust will be able to borrow in the markets under much better conditions. Europeans are eager to demonstrate that Old World banks are at least as healthy as US banks.”

Equinox partners

“Equinox Consulting creates the first European banking consultancy alliance,” Lettre du Conseil, June 2010

According to Jean-François Rigal, Managing Partner at Equinox Consulting , “Our partnership with Zeb and Resolving give us a solid foothold in Europe, expand our capacity for global execution, and provide us with the capability to support large clients through major operational changes. Approximately 15% of our annual revenue comes from projects outside France.”

Equinox subsidiaries

“Equinox Consulting opens an insurance subsidiary,” Caroline Durand, L’Agefi Actifs, October 22–28, 2010

“Most financial institutions treat insurance just like any other business. Insurance-specific consultancies typically focus on one particular area—like health insurance, claims management, or customer relations—while large consulting firms with insurance industry clients deal mainly with issues related to distribution networks and IT systems. Few consulting firms are experts in the finance and risk management functions,” remarked Jean-Louis Dufloux, Managing Partner at Equinox Consulting. Christel Albouy-Nallard, head of the Equinox Insurance Advisory Practice, added, “We offer organizational and strategy consulting services and help with change management. When a project involves implementing new software, we provide user training and make sure the system works properly; our clients’ IT departments handle the software configuration and integration.”

Other industry topics

“NYSE Euronext strikes back,” Thomas Carla, L’Agefi Hebdo, April 15–21, 2010

“NYSE Euronext is still under intense criticism for its transaction fees,” said Jean de Castries, CEO of Equinox Strategy. “While the market operator has lowered its prices, its efforts have been targeted to select customers and do not apply across the board. Moreover, NYSE Euronext charges higher fees for lower volumes, and since volumes plummeted during the crisis, customers do not end up saving any money.”

“Investing: What’s changed since the crisis,” Le Figaro Patrimoine, April 13, 2010

“The financial crisis and the Madoff scandal have opened customers’ eyes to the fact that savings products are too complicated and too difficult to understand. Now customers want to know exactly what they are putting their money into as well as all the risks they are assuming,” said Jean de Castries, CEO of Equinox Strategy.

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