Expanding its presence in the rapidly growing energy markets, NYSE Euronext Inc. (NYX) announced the culmination of its joint venture (JV) with exchange operator APX Inc. after the due approval by the regulators. The JV is known as NYSE Blue. However, the value of the JV remains concealed. The companies had previously announced the agreement to establish the JV in September 2010.
NYSE Blue will primarily deal with the emerging environmental and sustainable energy markets, in order to compatibly align with the growing product modification requirements in the industry and accordingly focus on newer market mechanisms to help curb climate changes.
NYSE will contribute its existing investment in BlueNext and retain a majority stake in NYSE Blue. BlueNext is already a predominant spot market for carbon credits. Meanwhile APX shareholders will retain a minority stake in NYSE Blue against their investment in APX. The shareholders of APX include Goldman Sachs Group Inc. (GS), MissionPoint Capital Partners and ONSET Ventures.
Accordingly, the JV will provide front-end solutions for accessing the markets, on integrated pre-trade and post-trade platforms. It will also offer services based on environmental registry, environmental portfolio management and environmental markets reference data. Additionally, BlueNext will be sharing its trading platform with NYSE Blue, helping it expand globally with a focus on North America and Asia.
Through the NYSE Blue JV with APX, NYSE continues to expand its exchange operations, particularly enhancing its competitive edge over its derivatives-focused rivals CME Group Inc. (CME), IntercontinentalExchange Inc. (ICE) and NASDAQ OMX Group Inc. (NDAQ) who are alongside exploring newer revenue-diversification opportunities in the rapidly expanding emissions and energy markets. The JV will help NYSE enhance its exchange trading through new emerging options including energy, carbon, renewable energy, water and other environmental factors.
On the hand, the JV complements well with APX’s product portfolio, which is a leading expert in market infrastructure and offers services to most of the environmental and sustainable energy markets.
Overall, we believe that NYSE’s disciplined fixed expense control and de-leveraging of the balance sheet through debt reduction are expected to give a big boost to the company’s long-term strategies of developing clearinghouses in London and Paris by the end of 2012.
While it is expected to be operational from late first quarter of 2011, new data centers were launched in U.S. and Europe. In addition, NYSE Liffe U.S. also expects to launch trading in Eurodollar and U.S. Treasury Futures by the end of first quarter of 2011.
Through these long-term strategies, NYSE is not only working vigorously to lower its business risk but also to expand and strengthen its competitive position globally. However, increased competition, weak volumes and product pricing along with government regulations continue to pose risk on the market share and the operating leverage of the company.
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