Stoxx slams new FTSE

SWITZERLAND – The head of index provider Dow Jones Stoxx says the new FTSE-Euronext pan-European index series is a “copy” of the DJ Stoxx 50 – and that many institutions won’t shift index providers in the current market.

“It seems to be a copy of our index with more constituents,” said Stoxx managing director Ettore Candolfi, of the new FTSE-Euronext series that was unveiled today.

Index provider FTSE has teamed up with exchange operator Euronext to offer two new tradeable pan-European indices, dubbed FTSEurofirst. The move pits FTSE and Euronext against their European rivals Stoxx and the Eurex exchange.

FTSE and Euronext say the new series “combines high liquidity with better market coverage, representation, and index tracking, to offer a superior index solution for trading European equities”.

The series comprises two new indices: FTSEurofirst 80 – which covers the current euro zone and provides a basket of 80 stocks, and FTSEurofirst 100 which provides a pan-European selection of 100 stocks. It says they offer “a much easier way to trade across borders in Europe”.

“We think that our two indices cover the needs of the market very well,” Candolfi says.

Institutions have “no money” at the moment to change index provider, he added. “Our index will remain the benchmark in Europe.” Candolfi also suggested the new combination would find it difficult to gain market share.

“If we see that the market needs a larger index then we will provide it,” he says. The new FTSE index includes the UK but excludes Switzerland, he said. “We see a need for Swiss shares,” he said, noting that a typical asset allocation comprises around 10% in Swiss shares. He said Stoxx’s approach was right five years ago, and that FTSE have now gone “the same way”.

FTSE chief executive Mark Makepeace said: “The market is telling us that it wants competition. The euro is firmly established and investors want broader euro and pan-European indices with the same or better levels of liquidity.

“FTSEurofirst indices offer investors a broader, more accurate representation of the European markets but are still easy to trade. The new indices have an instant appeal and relevance to everyone trading in Europe.”

Euronext chief executive Jean-François Théodore added that the series “benefits from the most accurate market representation for institutional and retail investors used to cover the European market”.

At the end of last year, Dow Jones, the Deutsche Boerse and the SWX Swiss Exchange bought out Euronext’s 25% stake in Swiss-based Stoxx and named Candolfi as managing director.

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