BME and MiFID
Brussels, October 24 2007
Key operator in Europe
2007 european stock exchanges – Spain, 4th Exchange by size
Billions €
3.043
2.906
2.670
1.272
1.395
1.049
1.025
696
Place
1o
2o
3o
Turnover
944
523
4o
840
458
5o
6o
Capitalisation
> BME ranks 4th in equity turnover
Source: federation of European Stock Exchanges (FESE). 30/04/2007
2
BME Versus Other Exchanges (capitalisation)
€ Mill.
22.000
20.000
18.000
16.000
14.000
12.000
10.000
8.000
6.000
4.000
2.000
EX
HE
L
IS
E
X
TS
AQ
SD
O
M
E
BM
E
LS
AS
X
O
T
CB
IC
E
E
HK
E
CM
X
NA
NY
S
E/
E
DB
NX
T
0
Source: BME, 06/06/07
3
Source: FESE, Share Ownership Structure in Europe
4
Source: FESE, Share Ownership Structure in Europe
5
Three drivers for future
1. Liquidity
2. Technology
3. Cost
6
EVOLUTION 2007 / 2006 (SEPTEMBER) turnover and trades
75,00%
70,00%
Turnover
65,00%
Nº trades
60,00%
55,00%
50,00%
45,00%
40,00%
35,00%
30,00%
25,00%
20,00%
15,00%
10,00%
5,00%
0,00%
BME
BORSA ITALIA
DEUTSCHE BORSE
Euronext
LSE
OMX
Turnover
54,36%
46,03%
57,54%
40,07%
43,23%
32,27%
Nº trades
59,36%
32,25%
60,84%
45,07%
72,11%
53,78%
Source: Borsa italiana, Deutsche Börse, Euronext, London Stock Exchange, OMX y BME.
Turnover has been growing above the european average. SIBE turnover growth
reaches 22% CAGR between 1999-2006
7
Spanish corporate dynamism
Market capitalisation (bill. €)
and euro zone ranking
May 1996
May 2007
Telecomunic.
9
#4
6
#11
6
#10
7
#4
83
Top 8 :
46.0 bill. €
Mket. cap.
21.6 bill.€
Turnover
(jan.-may.)
Banks
Oil & Petrol
10
Utilities
67
#5
Top 8:
#3 407.8 bill. €
Mket. cap.
29 #1 468.9 bill. €
Turnover
14 #3
(jan-may.)
50
#5
2
0
15
30
#6
#6
42
n.a.
Transport
#1
#3
33
#7
6
Textile
/Distrib.
89
#1
45
60
75
0
30
60
90
120
> Spanish companies have increased significantly their international presence through
M&A, multiplying by nine the market cap and by more than twenty the turnover since
1996
Source: Bloomberg
8
Highly liquid market
spanish blue chips are the stocks with highest liquidity at UEM
RK.
Company
January-Jul 2007
Daily Average
Value
(€ Bn.)
Value
(€ Bn.)
Relative Weight in
EuroStoxx50 (%)(1)
1
174,8
1,18
3,86%
2
151,4
1,02
3,31%
3
141,2
0,95
2,86%
4
117,7
0,80
2,90%
5
106,0
0,73
2,81%
6
104,5
0,71
3,50%
7
100,4
0,68
3,00%
8
98,9
0,67
3,12%
9
97,8
0,67
3,69%
10
90,1
0,61
0,82%
16
70,1
0,47
1,74%
25
49,8
0,34
0,98%
Source: Bloomberg
(1) As of 07/31/07
9
Equity market: High growth in turnover
Equity Turnover (SIBE)
> Highest-ever trading volumes on
equity market (+61,6%)
Billion €
> Record order volumes for a
single trading day (28 feb)
> Technological capacity of SIBE
increased threefold in January
1.153,5
859,3
850,4
> Consolidation of MAB as the
market for SICAVs
636,9
531,9
494,3
2003
> Advanced in the launch and
trading of ETFs
> Record number of processed
orders in 1Q 2007 : 19.2 Mill. (up
+48.1 % from 1Q 2006)
2004
2005
2006
1S/06
1S/07
Source: BME
10
Spanish market historical growth
“mid-caps” contribution to the increasing turnover
Mid and small market cap turnover
Turnover, excluded top ten stocks (bill.€)
288,9
194,4
170,7
122,0
81,1
18,4%
19,5%
19,2%
2002
2003
2004
(*) Jan. - May. 07
39,2%
96,6
43,6%
22,9%
2005
2006
2007(*)
% total shares traded
> Several spanish “mid-caps” are actively investing abroad and issuing shares in order to
finance non-organic growth.
Source: BME
11
Highly liquid market
BME: The Principal Market for Spanish Shares
Weight of trading in Spanish Shares
abroad versus total traded in BME
13,63%
%
7,50%
5,90%
5,20%
2,80%
1995
1996
1997
1998
2,40%
1,60%
1999
2000
2001
1,30%
0,80%
0,60%
0,60%
0,56%
2002
2003
2004
2005
2006
(1)
>
BME’s solid background and high liquidity makes BME the principal market for
Spanish stocks
>
During last years, BME has preserved and expanded spanish shares trading
Source: BME
(1) Increase due to Terra Networks Nasdaq’s listing
12
13
International comparative of liquidity
European indexes Efective Spreads
0,450%
0,400%
FOR EACH INDEX:
0,350%
FIRST COLUMN:
EFECTIVE SPREAD OF
THE INDEX.
SECOND COLUMN:
EFECTIVE SPREAD OF
THE 30 MOST LIQUID
STOCKS OF EACH
INDEX.
0,300%
0,250%
0,200%
0,150%
0,100%
0,050%
0,000%
Alemania (DAX
30)
España (IBEX 35) Francia (CAC 40)
Italia (MIB 30)
Reino Unido
(FTSE 100)
HO RQ UILLA INDICE
0,183%
0,191%
0,196%
0,184%
0,407%
HO RQ UILLA 30 VALO RES > PO NDERACIO N
0,183%
0,185%
0,190%
0,184%
0,317%
14
State-of-the-Art Technology
Competitive and In-House Developed Technology
Reliable
Competitive
Pioneer
In-house
> High performance; above 99.9% of availability
> Full on-line, back up systems
> Equity platform capacity increased three fold (January 2007)
> Capacity to absorb growing trading volumes
> Increasing sales of BME’s in-house systems
> BME was the first international stock market to interconnect different stock
exchanges (Madrid, Barcelona, Bilbao and Valencia) in 1989
> In-house development:
I) providing IT solutions for the entire value chain
II) flexibility: fully customised, quick update and risk prevention
15
Competitive Fee Structure
Exchange Fees By Country 2006
Exchange Fees By Country 2006
0.6
Basic Points
0.5
0.47
0.38
0.4
0.52
0.51
0.46
0.39
0.40
Spain
Canada
0.42
0.3
0.2
0.1
0
France
Germany
Italy
U.K. Sells
U.S.A.
NYSE
U.S.A.
NASDAQ
Source: Institutional Investor & Elkins/McSherry
16
Fees Comparison
Exchange Fees By Country 2006 (< 1 Basic Point)
1
0.9
0.9
0.8
0.69 0.68 0.67
0.66 0.65
0.6
0.54 0.52
0.5
0.51
0.4
0.47 0.46
0.42 0.42 0.4 0.4
0.39 0.38 0.38
0.32 0.3
0.3
0.16
0.2
0.09
0.1
0.01
ly
a
U.
nc
S.
e
-NY
SE
A
U. rge
nt
S.
in
-a
Na
sd
aq
Ca
Ne n ad
a
th
er
la
nd
s
Sp
a
Ge in
Ir
rm
el
an
an
y
d
-Se
lls
J
ap
Ne
an
w
Ze
L u ala
n
xe
m d
bo
ur
Po g
rt
ug
a
No l
rw
ay
M
ex
ico
0.05
Fr
It
a
lia
Fi
n
Sw lan
d
i tz
er
la
n
Sw d
ed
en
Au
st
r
De i a
nm
ar
k
Be
l
g
U.
i
K. u m
-Se
lls
0
Au
st
ra
Basic Points
0.7
Source: Institutional Investor & Elkins/McSherry
17
Fees Comparison
Total Cost By Country 2006 (< 35 Basic Point)
Market Impact
40
Exchanges Fees
35
Average commissions
30
25
20
15
10
5
0
l
k
m
ls
a
n
nd
lia
ay
ar
ga
iu
el
tri
de
u
w
la
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s
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m
t
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n
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-Au
Be
No
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Sw
Po
d
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n
w
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el
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ly
nd
la
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w
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s
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n
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an
ai
el
an
nd
YS
nc
ad
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p
S
a
s
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n
lr a
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J
rm
Fr
Na
-Ca
.he
Ge
K
t
.
S.
e
.
.
U
N
U
S
U.
Source: Institutional Investor & Elkins/McSherry
18
MiFID aspects for Exchanges
> Pre Trade Transparency
> Post Trade Transparency
> Best Execution (for Investment Services Firms)
> Transaction Reporting (special requirements for CNMV)
> Orders large in scale
> Deferred publication of Blocks
> Competitors: Sistematic Internalisers and MTFs
19
BME and MiFID
Excellent relation liquidity, cost and technology
Strong Competitive position in Best Execution
STP process in trading+settlement
Risk in market fragmentation due to new competitors IS
and MTFs
But also new oportunities in data information, market
access and client servises.
20