The Irish Stock Exchange (ISE) is understood to be on the lookout for another bourse operator to join forces with, marking a departure from its prized independence. The move comes as the firm seeks to position itself for opportunities after Brexit.
While there has been a wave of mergers and acquisitions across the global industry of stock market operators over the past decade, the ISE's chief executive, Deirdre Somers, has been a strong advocate for the Dublin bourse remaining independent. She has repeatedly said that this has allowed the organisation to remain nimble and support an "ecosystem" in Ireland's financial services industry, including corporations that issue equity and debt, brokerages and professional services firms.
However, management at the exchange are now believed to be looking at fresh options, including the possibility of a strategic alliance with another European or international exchange. The work is said to be at an early stage.
“Since the Brexit referendum, we have been evaluating potential strategies to ensure that the ISE is well placed to take full advantage of Brexit-related business opportunities,” a spokesman for the exchange said. “This work is ongoing.”
He declined to comment further.
The demutualisation of the stock exchange in 2014, after 221 years as a company limited by guarantee, allowed its six remaining founding members to become shareholders and split a €27.5 million windfall. One of the six, Royal Bank of Scotland, subsequently exited its investment, leaving Davy with a 38 per cent stake, Goodbody Stockbrokers with 26.7 per cent, Investec with 18.5 per cent, while Cantor Fitzgerald and Campbell O'Connor each hold 8.4 per cent.
Last year, the exchange consolidated its position as the leading international centre for the listing of funds and the second most popular hub for bond listings across 68 exchanges, according to World Federation of Exchanges data. In addition, the number of stock trades on the bourse increased more than 17 per cent to a record 6.6 million, according to the company’s latest annual report.
The Dublin exchange spent more than two decades as part of the London Stock Exchange before becoming independent again in 1995. Since then, it has developed a long-standing relationship with the Frankfurt exchange operator, Deutsche Börse, whose equity trading system is used in Dublin.
Sources said that the exchange’s attraction for a rival lies in Ireland’s continued EU membership as the UK prepares to leave the bloc. An international bourse seeking to lure business from the London Stock Exchange as a result of Brexit may have more success if it had an alliance with the Dublin exchange, which operates in a common law jurisdiction, similar to the UK, they said.
While Ms Somers has staunchly defended the Irish Stock Exchange's independence over the years, she signalled a slight softening of her stance in an interview with The Irish Times last year.
“There’s no ideology here [in remaining independent], but being bought is not a strategy,” Ms Somers said. “Being bought in order to be able to do something you can’t do on your own is a strategy.”
However, she said at the time that she had “yet to see a compelling reason” where the ISE would fit within a wider group.