Swiss Stock Exchange boss on doing a $2.9bn deal in a pandemic and why he fears Amazon’s invasion into finance markets

William Arsn

What’s it like closing a big deal amid a pandemic? Ask Jos Dijsselhof, chief executive of Swiss giant Six, which completed a $2.9bn takeover of Spanish rival BME in June.

After becoming Europe’s third largest stock exchange operator by revenue, Six set its sights on expanding its data business to take on Bloomberg and Refinitv.

Financial News spoke to Dijsselhof about IPO pipelines amid the virus crisis, the shorter trading hours debate, and what Amazon’s entry into the finance sector could mean for exchange operators.

Question Why did you decide to buy BME?

Jos Dijsselhof One of our strategic themes is that size matters. That’s why we started to look at opportunities to expand our business so that we have one leg in the EU and one in Switzerland.

We came to the conclusion that BME was by far the most sizable, professional and profitable exchange in the industry that was available. There was a lot of talk in the newspapers about other people making bids, but in the end we were the only one in the ring. We won the fight.

Q What was it like to close a big deal in the middle of a pandemic?

JD I wouldn’t have been surprised if the process had taken a bit longer. But I was wrong. A lot of work had already been done by the regulator before Covid-19 hit.

They handed over the file to the Spanish government, who within three weeks said, “We’ve seen the file, we like the business opportunity and the commitments to the Spanish market”. I was a bit nervous that it would take longer, but our experience has been very positive.

Q Have you had to change your strategy because of coronavirus?

JD It sounds strange but the corona time has been very good for the exchange business. We had record volumes, our best months ever almost in history, both on the Six side and the BME side. Because of the uncertainty, volatility has increased.

If you see the Volatility Index, you can see volatility was very low before and with corona, it went extremely high. There’s more volatility, more trading happening, more people selling and buying. And actually, the overall market is also still quite positive about the economic outlook.

I think for [the] payments [business], what we have seen is people rapidly moving away from using ATMs, so there we are moving more quickly to digital and mobile payments.

Q Did you learn anything from the collapse of Deutsche Börse and the London Stock Exchange’s proposed merger in 2016-17?

JD I observed that very closely. What you’ll see with most of the big mergers or the big acquisitions is that either people underestimate the political and competition elements or they underestimate the local interest in the business and what is driving the key decision makers. Brexit came in the middle of [when the deal negotiations] were taking place.

If Brexit had not been there, then perhaps that merger would have happened.

I started talking to the BME CEO at an early stage to really understand his strategic views and to see whether there’s alignment and agreement on that and whether we both thought it would be good to go forward.

I think many people seem to forget to listen in the middle of an M&A transaction and they only focus on price. I think we listened really well.

Q How’s your IPO pipeline?

JD Unfortunately, we are in the same situation as many of the other exchanges — that many companies have decided this is not a good time to IPO. Uncertainty is good for trading and trading volumes, but it is never good for IPOs. 

We do have a pipeline, but it is a bit difficult to predict the timing. I think [IPO activity] will be a bit more reduced this year compared to last year and hopefully that will pick up towards the end of the year and into next year.

Q What’s your next big priority?

JD Forty per cent of our revenue is coming from our data business, which is a very sizable business and we want to grow that.

We want to play it a little more defensively and make our data business a real challenger. So you will see us creating products and services and really challenge [other players] in a market where we’re not dominant. Some of the big providers in the space are Refinitiv and Bloomberg -— we will challenge them with specific products and services. We are nimble, we are quick, we can put things into the market quite quickly.

We think there is more need for our customers to deal efficiently and effectively with data and they are requesting more data from us. We even got a request the other day about [building a] diversity index, so we are continuously evolving to build that business.

Q Six is one of the major stock exchange groups to incorporate blockchain technology. What’s happening with your digital assets exchange?

JD I have to say, because of corona, the possibility of getting people together is a bit more difficult. But there is also a lot of resilience as some mega banks have made decisions at board level to invest in digital assets and they are doing it with us.

So I’m very confident that we will get that up and running and live in the near future.

Q Where do you stand on the debate of shortening trading hours in Europe?

JD I have a couple of simple rules of business, and one of them is: “If it’s not broken, don’t try to fix it.” I don’t see anything broken in the current trading hours. So I would support keeping it as is.

To me, shortening trading hours is more treating the symptom and not the cause. You just need to make sure you have a diverse labour force and enough women in your business. What the trading hours are will not make a big difference.

Q What keeps you awake at night?

JD To me, if Amazon, Google or Chinese giants decided to put a lot of money into invading the financial market infrastructure, that would be a real challenge.
I think now we are competing with each other, but we are keeping a very close eye on whether there is going to be a big entrance in the finance world.

To contact the author of this story with feedback or news, email Shruti Tripathi Chopra

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