Monday 18 December 2017

ISE chief rejects merger rumours as Maltese joint venture unveiled

Laura Noonan

Laura Noonan

IRISH Stock Exchange chief Deirdre Somers yesterday mounted a spirited defence of her organisation's enduring importance in Irish life, insisting someone would have to be "delusional" not to see the benefits the exchange brings to local companies.

Ms Somers insisted that the stock exchange wasn't considering a merger with a rival, since there was a "very strong possibility" that Irish companies' ability to raise cash would be "irrevocably impaired" by any changes to their local exchange after a merger.

The ISE is instead considering "partnerships and alliances" with service providers and other "innovations" to increase its penetration and adapt to the changing markets, Ms Somers said.

The comments came as the ISE unveiled a new joint venture with the Maltese Stock Market which will create a new European market for wholesale debt securities. The ISE will own 80pc of the venture, but it will be run and regulated out of Malta.

It will deal with complex debt listings such as asset-backed securities that have to be listed on exchanges even though they are typically traded in one-to-one over-the-counter transactions.

The ISE already runs the third biggest debt security market in Europe, with 22,500 bonds listed, including some that would be suitable for the new Maltese joint venture.

New offering

Ms Somers yesterday admitted that the new offering would compete with what the ISE is already offering, but said she didn't expect existing ISE customers to transfer to the new market -- even though its fees will be lower.

The ISE's head of traded markets, Brian Healy, also stressed that the Maltese offering would attract different customers, particularly in areas like shipping finance, where Malta is well established and Dublin isn't.

"We believe there's room for another [securities] market. If we don't do it, someone else will," Ms Somers said, adding that the ISE also wants to use its expertise to get a bigger presence in a market that is rapidly growing and increasingly complex.

The Maltese deal has been in the making for several years and Ms Somers said the ISE would like to roll out similar joint ventures with other stock exchanges, potentially in the Middle East.

"The collapse here did not impact one bit on our reputation in this market," she said, while the ISE's director of international primary markets Gerard Scully said there had been a "warmer reception" for Ireland in the last six months in particular.

The move into international joint ventures comes against a stark contraction in the stock exchange's more traditional equities market.

The ISE has seen the value of its quoted companies decimated in recent years, as the banks' values collapsed, Anglo Irish Bank was nationalised and two other financial (Irish Life & Permanent and AIB) were all but nationalised.

The contraction was compounded by the decision of concrete giant CRH and food company Greencore to move their primary listings to London. C&C is believed to be considering a similar move.

Executives pointed out yesterday that the ISE's revenues rose last year amid higher trading volumes. Revenues are dictated by volumes, not value, they pointed out.

Real benefits

Ms Somers insisted that there were still very real benefits for Irish companies being listed on their local exchange, since they wouldn't get the same level of analyst or broker coverage if they were listed in London or another foreign market.

These benefits are particularly important for smaller companies who wouldn't get the same level of broker or analyst support if they were listed outside the home market, she said, while insisting that major companies like Paddy Power and Ryanair had outperformed their respective sectors in part because they maintained ISE listings.

Irish Independent

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