Initially founded in the mid '90s as a loose network of independent firms, ESN has grown in strength to evolve into a coherent strategic alliance. Members are committed to jointly developing and distributing their European Company and sectoral research by working together to analyse stocks and process orders on European markets.
The Business Idea
The history of ESN
The "ESN" idea was born before the introduction of the EuroThe introduction of the Euro (1999) has had a dramatic effect in stimulating securities markets that had previously been obstructed by currency segmentation. Separate currencies meant that many Euro-area investors were unable to create a substantial portfolio of equities without exposing themselves to currency risk. However, on January 1st 1999, the launch of the Euro essentially created a new real-time pan-European market, bringing tremendous change to financial markets and investors alike.
Cooperate to compete in globalised industry.
An innovative response
This peculiar coalition of local brokers decided to approach the changing market with a more innovative response: Members are committed to jointly developing and distributing their European strategy and sectoral research by working together to analyse stocks and process orders on European markets. More recently, the cooperation amongst Members has been enlarged to other common business areas (e.g. Equity Capital Market, Debt Capital Market, Secondary Bond Market, etc.).
Sector-based asset allocationWith the launch of the Euro, asset allocation policies in equity markets at most institutions became much more "sector-based" rather than "country-based". In equity research, this sector-based analysis of stocks allowed for a like-forlike comparison across country borders – a shift which many believed would mostly favour global or pan-European investment houses.
Local brokers in each of the Eurozone countries reacted to these changes in different ways; some focussed solely on their respective domestic stocks while others developed their in-house research capability on European stocks. As a consequence, within sectors, some local brokers started competing with global brokers. However, the ESN Members realised that "local insight" was still critical and sought after in the pursuit of performance. In order to provide top quality pan-European coverage, a proactive group of investment banks and brokerage firms created "ESN" (European Securities Network). Today, ESN represents a credible and tangible pan-European alternative to global brokerage houses.
Pan-European with local proximityThrough ESN, each Member can provide a pan-European multi-local service in equity research, sales and trading. The members benefit from access to a European corporate and investor network including access to every major institution in Europe. Combined with the breadth of a pan-European approach, ESN's equity research provides the advantage of local insight and timeliness. This is particularly important in the small and mid-cap arena where ESN's local proximity gives the Members a competitive advantage over other pan-European offerings. Equally, in the large cap arena, ESN's investment views benefit from each Member's in-depth understanding of local economic, political and regulatory developments.