Monday, April 15, 2013

Exchange sector report

Few sectors have faced such extensive restructuring recently as the world’s stock exchanges. Many exchange platforms have seen a number of high-profile cross-border mergers being announced in recent months. In fact, many now question whether Western exchanges will be able to retain their global dominance.

Changing dynamics

As economic growth in the BRICS and other emerging economies continues to outshine the Western markets, anticipations that the next generation of mega exchange will emerge from the developing countries is growing stronger. As a matter of fact, many Western companies are now seeking to list in these markets, recognising the importance of accessing their growing capital bases. Further, as the axis of growth and market activity shifts South and East, the emerging markets are set to be the focus of the next wave of transformational change and deal-making within the exchange sector. However, Asia’s place in the future global exchange market may depend upon the liberalisation of regulatory systems, revision of ownership structures and transparency.

A fresh wave of m&as

Consolidation was the way out for many exchange houses during the financial crisis. But it proved to be a boon for new entrants. For instance, Chi-X and BATS Europe had together captured more than 20% market share in European share trading by the time of their merger announcement in February 2011. A similar trend emerged in the US, with BATS Global and Direct Edge having taken 21% of the US equity market by the end of 2010, moving up to number three and four in the market respectively. As a result, there has been a fresh wave of planned mergers. This includes the tie-up between NYSE Euronext and Deutsche Börse, along with the aborted merger between LSE and TMX.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
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