In many situations in life, less is more, or size doesn’t matter. But in basketball, bridge building, and bison breeding, big is normally better, and I contend that big is also better in many areas of the financial business.
Size is a crucial factor for SIX, at least in our function as a financial market infrastructure provider. Size gives us weight when it comes to having a say in shaping the rules of our business. But size is also a prerequisite for operating successfully in the traditional platform business. As the size of a platform increases, economies of scale reduce its costs. The Swiss Stock Exchange, the securities exchanges in Spain, and the Swiss payment transactions system constitute such platforms and our financial information business is scalable, too. We create networks that our clients access to connect with each other. These networks have to grow. It takes rising volumes to enable us to stay competitive, to lower transaction costs within our networks, and to create recurring added value for our clients.
So, on closer examination, it isn’t sheer size, but rather growth that’s crucial. And we at SIX want to grow to be able to shape the financial markets of tomorrow. It takes a sound foundation for growth to work, and we have one: our business model is broader-based than those of our competitors. We have two strong domestic markets in Switzerland and Spain. We can count on support from our shareholders and possess ample funds.
The expenditures invested to lay this foundation caused us to grow less robustly than the rest of the market in recent years. But those expenditures were necessary and have ultimately put us in a position to participate in the upward trend: the market for capital market infrastructure has expanded by 3% since 2012 and has even grown by 5% worldwide. The overall market for financial market infrastructure, including payment transaction infrastructure, has paid off for shareholders, delivering an average annual return of 20% since 2012.