International stock exchange merger
After a long and complex courtship, the New York stock Exchange and the Euronext exchange announced a merger, The NYSE is by far the #1 exchange in the world. Euronext is #5 in the world and #2 in Europe (after London). The deal, though teemed a merger of equals, will be dominated by the American interest.
The deal, if it goes through, creates the first transcontinental exchange and gives both exchanges bigger access to each other's markets. It will get the NYSE further into the derivatives business, something it has been aiming at. The group plans to snap up other smaller exchanges, including those in Italy and Spain, along with the Philadelphia exchange in the US.
One thing these exchanges will do is accelerate the trend away from traditional floor trading to electronic trading, a trend that has been growing at the NYSE. That's due to its merger last year with electronic trading company Archipelago, when the exchange went public. Archipelago has given the NYSE a system it can use to support a longer trading day, perhaps even round-the-clock trading, something impossible on a stock market floor.
The German stock exchange, Deutsche Boerse, has also been a suitor for Euronext, and has promised to top the NYSE's bid. While the German exchange is smaller than the NYSE, it is far more profitable. Few analysts expect it to win. In fact, some think that the Germans may be targeted by NYSE Euronext. Electronic trading combined with a major European presence will certainly make the trading of stock (and derivatives) even more virtual and less tied to a physical place.
One reason for the merger is the nature of teh biggets institutional customers. As one analyst is quoted as saying in a Wall Street Journal story ("NYSE, Euronext
Unveil Big Wedding", 6/3/06): "I think the exchanges need to become much more global, in the same fashion that corporate issuers and investors have become global." Only the big can serve the big.
Stock Exchange Acquisitions:
In 2000, the Paris, Brussels, and Amsterdam exchanges joined as Euronext
In 2002, Euronext acquired the French Futures Exchange (LIFFE)
In 2002, Euronext acquired the Lisbon stock market
In 2005, the New York Stock Exchange merges with electronic trading company Archipelago and goes public.
In 2005, NASDAQ bought electronic trading company Instinet.
In 2006, NYSE Euronext announce deal
In 2006, NASDAQ buys 25% of the LSE
Largest Exchanges (figures from the Wall Street Journal)
| Name |
Location |
Ownership |
# Companies Listed |
2005 Market Cap. of Shares Traded (in billions of $) |
| NYSE |
New York |
public |
2,176 |
$13,310 |
| Toyko Stock Exchange |
Tokyo |
private |
2,372 |
$4,789 |
| Nasdaq |
New York |
public |
3,150 |
$3,605 |
| LSE |
London |
public |
3,169 |
$3,321 |
| Euronext |
Amsterdam and Paris |
public |
1,225 |
$2,937 |
| Deutsche Boerse |
Frankfurt |
public |
757 |
$1,325 |
| Hong Kong Exchanges |
Hong Kong |
public |
1,143 |
$1,054 |
| BME Spanish Exchanges |
Madrid |
private |
NA |
$1,041 |
| Swiss Exchange |
Zurich |
private |
358 |
$1,008 |
3:32:17 PM 
|
|
