The History of the Paris Stock Exchange

The start of the 19th century saw the inception of the Paris Bourse, and also the beginning of a new era in the French financial market. While there were some similarities to the monopolistic, old-style Parisian marketplace, the Paris Bourse was considered to be a public place where securities trading could take place. While its inception did not give the French people access to unfettered free trade, it was representative of a financial reform movement taking place throughout the country.

The Paris Bourse was based in an elaborate building called the Palais Brongniart, which was finished in 1826, and which housed trading activities on the exchange for a century and a half. During the 1980s, the Paris Bourse underwent a period of reform, with computer systems being integrated into its trading operations in an attempt to gain back business that had been lost to London’s stock exchange. While the Paris Bourse’s trading system had initially been the open outcry method, in 1989 this system only remained in a very limited capacity, with the exchange becoming entirely electronic in 1998. The four major French financial institutions underwent a merger and comprehensive restructuring in 1999, with the MATIF SA, the SBF, the Société du Nouveau Marché and the MONEP SA being consolidated into a single new company, known as the Paris Bourse SBF SA. This new formation allowed all kinds of trading activities that encompassed bonds, derivatives, stocks and commodities to be available in a single exchange.

In 2000, the Paris Bourse officially ended its role as the country’s independent marketplace, with the new Paris Bourse SBF SA merging with the Brussels and Amsterdam exchanges to form the very first pan-European stock exchange. This eventually became known as the Euronext N.V. The Euronext exchange offered completely integrated electronic trading for traders, as well as giving access to various markets including commodities, derivatives, debt and equities. 2007 saw the merger of the New York Stock Exchange (NYSE) with the Euronext exchange, forming an entity called NYSE Euronext, which was widely regarded as a way of creating a global marketplace to promote international trading of debt instruments, derivatives and equities.

The Indices and Structure of the Paris Stock Exchange

There are three distinct sections of the French equities market:

• The Premier Marché – Once known as the Official List, this section includes big foreign and French national companies as well as the majority of Bond issues.
• The Second Marché – This section lists mid-sized companies.
• The Nouveau Marché – This list features rapidly expanding startup companies that are looking for more capital in order to finance their expansion, and which are linked to the European equity growth market Euro.nm.
• There is also a fourth market, called Marché Libre. However this is not regulated, and is administered by Euronext Paris to handle transactions in securities that are not listed on any of the other three markets.

There is also a family of different indices that are calculated by Euronext Paris:

• CAC 40 – The benchmark index of the Paris Stock Exchange is the CAC 40, which is in real time. This index is representative of a capitalisation-weighted measure of the top 40 significant values from the highest 100 market caps on the Euronext Paris exchange.
• SBF 120 – All of the components of the CAC 40 are also included in the SBF 120 Index, which is rather broader and is recognised as an investment funds benchmark.
• SBF 250 Index – This is a long-term performance benchmark for equity portfolios, which includes the entirety of the SBF 120 index in a structure that is determined by sector.
• The MIDCAC Index – This is another important index, which includes 100 of the Premier Marché and Nouveau Marché’s most liquid mid-sized stocks, and is calculated on the basis of closing and opening prices, standing as a benchmark for funds.
• The Second Marché Index – Like the MIDCAC, this index is also a benchmark for funds.
• The Nouveau Marché Index – This represents stocks that are in the growth market.
• SBF-FCI – This is an index based on a convertible bond selection representing a minimum of 70% of this market’s total capitalisation, calculated twice a day.