Switzerland's stock exchange wants to launch a crypto exchange in Asia as part of a triple-digit revenue goal with digital assets as it eyes more bolt-on deals for its wider business, CEO Jos Dijsselhof told finews.com.
Jos Dijsselhof, you wrapped the $3 billion acquisition of Bolsas y Mercados Españoles last year. Are you on track with reaping synergies from this expensive deal?
We are very confident that we will deliver on the synergies of the transaction, both on the revenue side and the cost side. It has changed the fabric of how we operate since we now have with Switzerland and Spain two home markets. And it also changes our position in the industry.
Changed for better or worse?
We are really on the map now. BME has helped us to make that happen and make us a real international company. I visited Singapore’s fintech festival – they are really keen on what we're doing with digital assets, CBDC (central banking digital currencies), and the proof of concepts we are doing with the Swiss National Bank.
Is SIX ready to go out and acquire again – either in the exchange's business or in post-trade or the financial data unit?
Our three-year organic plan looks very healthy, in terms of costs, top-line, and margin. But if there are opportunities to do more in terms of add-on transactions, we will continue to look.
What about larger deals, on the order of the BME?
We will also look into bigger opportunities if they are out there. In all our business areas, not just in the exchange. There might be some opportunities in Europe. And I'm not ruling out following the growth path of some of our customers, who either growing their business more in the U.S. or even more probably in Asia. It has to fit our strategy.
What would you like to acquire in the U.S. or in Asia?
I can’t answer that, but if you follow where wealth management is and Swiss banking going, that will lead you to a couple of places.
How else can you win scale, including in your post-trading business and in financial data?
The digital asset space is where a lot of the growth of the future will be coming from. We are with our digital exchange, SDX, at the forefront of the industry.
«We might one day consider expanding to the U.S.»
There's also a lot of local support for our joint venture with a Japanese financial institution SBI to build a digital exchange in Singapore. We might out a digital exchange in Spain, and who knows, perhaps in one day, we will look at the U.S., although might be too optimistic. The U.S. is such a crowded place.
What about on the data side, where you hired Marion Leslie from Refinitiv last year?
We basically hired to turn the business around from running for efficiency to doing so for growth. She's stabilized the revenue first and she now has a fairly aggressive plan to increase our revenue 20 percent to 25 percent in the next four to five years.
How specifically can you achieve this growth in financial data?
We want to do that through our lines of ESG funds, technology using cloud and APIs and alternative data, ETFs. So we have a lot of strategic themes to basically offer more data and do so in a smarter and more efficient way to our customers.
Are you still optimistic you can compete with the deeply-entrenched players like Refinitiv and Bloomberg which dominate this industry?
Yes, but we also have to be realistic. They are giants compared to us, but we are still sizable. I'm confident that even purely organically, we will be able to grow this business at the pace of the industry – which means that the relative size compared to the two big ones will probably stay the same.
«We have to be internationally competitive to survive»
Therefore, we're also looking to see where we can add more inorganic space to this business. We need to invest to make sure it stays relevant.
Data is one of several areas of SIX that weren’t exposed to a high level of competition in the past. Can the Swiss exchange survive in this global shark tank?
To survive, you need to have at least as big of teeth as others. If we would sit, wait and protect our turf here then others would come in and eat our lunch. We want to be able to fight for transactions, but to do that we need the right pricing and the right technologies. We have to be internationally competitive to survive.
Are your efforts on open banking in Switzerland timely enough or has that ship sailed?
Switzerland has chosen a more market-driven approach, which I think will ensure that we catch up with the U.K. and Europe. In the end, this will only be successful if it is connected to the rest of Europe.
«I don't have huge hopes the EU-Swiss situation will thaw anytime soon»
So we need to make sure that our open banking standards and capabilities will connect to PSD2 and to open banking in the U.K. – there might even be other, global standards.
Speaking of Europe, do you believe the non-equivalency issue can be resolved?
I try to stay away from being a politician, but I don't have huge hopes that the situation will be unlocked anytime soon. There needs to be a cooling-off period before the two parties get back to the table.
What about until Switzerland and the EU can talk to each other about this again?
We support the Swiss Federal Council in its intention to transfer the emergency measures into ordinary law. But in a very simplistic way, it's already solved. The 30 percent market share in trading E.U. shares before the non-equivalence declaration was mainly in the U.K.
«We're almost back to the same EU market share – despite non-equivalency»
The mutual recognition between Switzerland and the U.K. sprung shortly after Britain left the EU. We’re almost back to the same market share.
You recently launched the SDX’s first product – your own corporate bond. Where to now?
We see a lot of demand for bonds in Switzerland and internationally. There are also discussions on equity and structured products. Some banks are even discussing whether they can tokenize loan books and other things which are on their balance sheet and normally not traded on exchanges.
What lessons did you learn from the SDX’s somewhat tortuous launch?
Driving the complexity of the initial idea to reality increased overtime for us. We’ve also seen demand for these digital assets and the willingness of banks to invest in this lagging somewhat behind. And then the whole process of getting approval from Finma took more time because, like us and the banks, they were entering uncharted territory.
«Triple-digit revenue from digital exchange business»
The collaboration with Finma was really constructive, by the way. While I would have liked to be live probably a year ago, we are still the first stock exchange in the world that has built a digital stock exchange, front to back – the whole value chain, with a license.
What about building the ADX – or digital exchange in Asia?
We probably will go for crypto there first and then the rest of the digital assets. In Asia, there's a much greater participation in crypto from both institutional and retail investors.
How much of your business will eventually be off the digital exchanges?
This is not just a hobby – we expect this to be a substantial part of our business going forward. There are triple-digit forecasts which we want to achieve.
Jos Dijsselhof has been CEO of SIX, Switzerland's stock exchange group, for the past three years. The 56-year-old Dutch native ushered in a period of expansion in Europe as well as into digital assets with the SDX, its blockchain-based exchange. SIX this year acquired Madrid's stock exchange, Bolsas y Mercados Españoles, last year as well as data firms Orenda and Ultimus this year. Previously, Dijsselhof was operating chief of Euronext and worked for Australian bank ANZ and ABN Amro, after earning a bachelor's degree in computer science and a Masters in business.
