Exchange group Euronext has completed its €4.4bn purchase of Borsa Italiana and will concentrate its operations in the EU by moving its computer servers out of the UK.
The takeover, formally cleared by regulators on Thursday, means Europe’s largest listing venue will move the computer hardware on which deals on exchanges across the continent physically take place, from Basildon in Essex to Bergamo. The equipment, which will handle a quarter of all European equities deals, will move in the second quarter of next year.
The UK’s departure from the single market was an important part of the decision to move the servers, said Stéphane Boujnah, chief executive of Euronext.
“Post Brexit we decided this infrastructure was so critical we didn’t want to take any risk with data,” he said. “We wanted to keep the data centre within the European Union.”
Boujnah said Italian authorities had not placed any pressure on the group to relocate, but admitted that “without the Borsa Italiana deal we would not have moved the data centre to Bergamo”.
The exchanges operator said on Thursday the enlarged group would have a strong Italian influence after buying the owner of the Milan stock market from London Stock Exchange Group with the help of two Italian investors. More than a third of its revenues will come from Italy.
The deal has turned Euronext into one of the biggest market operators in the EU. It is the bloc’s largest listing venue and runs seven stock exchanges. It will also take over a venue for trading EU government debt and a clearing house, and raise €1.8bn through a rights issue to help fund the acquisition, the group said.
Exchanges lost their old pits, where traders would shout out prices, when the market was computerised. Most modern day trading takes place in vast, highly secure data farms on industrial zones miles from financial hubs. Euronext’s servers have been housed for the last decade at a data centre in Basildon, Essex, and owned by Intercontinental Exchange, the US group.
Its decision will force banks and high-speed traders to also move their IT equipment to Italy, to be as close to the Euronext servers as possible.
Many have spent millions on superfast cables and microwave radio networks and towers so they can race in milliseconds between trading venues in Slough, Basildon or central London and Frankfurt to execute trades.
“It seems like Brexit gets harder and harder as it gets done,” said one trading executive who declined to be identified. However he said ICE had been one of the more expensive providers. “The move will be costly short-term but in the long-term it will be beneficial as [Italy] will be cheaper,” he said.
“This will be a great opportunity for our clients . . . even if it will come with some changes,” said Boujnah.
Intesa Sanpaolo and state-owned investor Cassa Depositi e Prestiti, will also provide €579m in new equity through a private placement at €87.70 per share, to become shareholders in Euronext. CDP will take a 7.3 per cent stake.