EXCHANGES worldwide are being swept up in an accelerating wave of consolidation after Deutsche Börse yesterday afternoon revealed it was in advanced talks with NYSE Euronext to create the world’s largest exchanges operator by revenues.
Coming just hours after the London Stock Exchange (LSE) and Canada’s TMX Group said they would join forces to create the world’s largest stock exchange by number of listings, the merger frenzy indicates that consolidation of the bourses has begun in earnest.
All exchanges are battling to survive as rapid changes in technology and increased competition from new types of trading platforms steal their former monopoly.
NYSE Euronext and Deutsche Börse said the combined company would “create an important counterweight to the proliferation of alternative trading venues that operate with less transparency and far fewer regulatory requirements than [our companies].”
While the LSE and Toronto-based exchange TMX Group yesterday billed its £4.3bn deal as a “merger of equals”.
Steve Grob, director of group strategy at Fidessa, which provides trading software to stock exchanges, said the news was “not too much of a surprise.”
“The fragmentation of trading means the dominant position of any national stock exchange is being constantly eroded by alternative platforms,” he said. Grob said a merger would raise question marks over the EU’s markets in financial instruments directive.
“The point of MiFID was to reduce the monopolistic power of national stock exchanges – but the way exchanges are fighting back is to merge to realise economies of scale,” Grob added.
MARK Warham led Barclays Capital as joint lead financial advisers to the LSE.
The managing director and co-head of M&A previously served as director general of the Takeover Panel.
Morgan Stanley’s joint lead advisory team included Christopher Carter, Simon Robey,Matthew Jarman, Max Mesney and Dougal MacDonald.
RBC Capital Markets was also a financial adviser to the LSE, headed by Mike Carter and Josh Critchley in London.
BOA MERRILL LYNCH
PHILIP Noblet and Matthew Watkins are leading the Bank of America Merrill Lynch team as joint lead financial advisers to TMX with Bank of Montreal Capital Markets.
Noblet also advised on last year’s Korea National Oil Corporation hostile takeover of Scottish energy firm Dana Petroleum.
He is co-head of EMEA mergers and acquisitions.
Andre Hidi and Ariel Walsh led the Bank of Montreal team.