THAT the merger between the London and Toronto Stock Exchanges was old news by the end of the day on which it was announced is indicative of just how quickly consolidation in the sector is moving. By the afternoon, Deutsche Börse and NYSE Euronext had stolen the limelight, announcing they were in advanced talks to create the world’s largest financial exchange.
In Europe particularly, exchanges are having to react to new regulation forced on them by the Markets in Financial Instruments Directive (Mifid), among others. It means competitiveness is a global priority, and both the LSE and TMX have lost market share in recent years, with the former’s falling to an all-time low of 60 per cent in October 2009.
Stiff competition from technologically advanced new-kids-on-the-block like BATS Global and Chi-X Europe has seen traders shift their loyalties.
Add to that the high-profile sale of the Australian Stock Exchange to its Singaporean counterpart, and the Russian tie-up between Micex and RTS slated for late next year, and it seems inevitable that stock exchange mergers have gone way beyond a passing trend.
Investors in the LSE were initially giddy at the prospect of the world’s largest exchange by listed companies, sending its shares up 9.5 per cent in early trading.
But by the afternoon NYSE Euronext and Deutsche Börse had put the UK-Canadian tie-up in the shade, at the same time indicating that another wave of exchange consolidation is cascading through global markets.