Why exchange mergers may not be the right strategy
Just as the Occupy Wall Street sit-down fails to recognise
that most of the lamented disasters in the economy were enabled
by Washington, a modest three hours by Amtrak to the south, the
recent spate of exchange merger proposals fails to identify the
These proposals are usually between exchanges that have
already achieved primacy in one or more product lines - the "go
to" markets for this-or-that. Few would bother to challenge an
entrenched exchange and success would be surprising even if
Merger brings dominant market positions under the same roof.
This a an undeniable convenience, especially if common clearing
results. But it does not assure that any of the products will
Even cost-savings from the consolidations may lag when a
merger implicates more than one regulator. The Deutsche
Boerse/NYSE-Euronext combination could involve nine regulators.
Two in the US, one in Germany, the Swiss and, by reason of the
Euronext consortium, market regulators in Belgium, France, the
Netherland, Portugal and the UK. Each will want a seat at the
table for what they perceive to be decisions affecting their
respective constituents. The organisational chart may look
global but the managers will continue to have to think
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