Plans by NYSE Euronext and Deutsche Boerse to get together and create the world’s largest stock exchange have set off a new round of consolidation speculation and a further industry shake-up appears to be underway.
Having stood aloof last year when the Singapore and Australian bourses moved to merge, Hong Kong – one of Asia’s biggest exchange – has now said it would consider “international alliances and partnerships.”
The larger markets are responding to strong competition from newly created electronic trading platforms:
Analyst Andreas Lipkow with MWB Fairtrade Securities said: “For the global financial market I think this is just the consequences of other mergers, for example the Singapore Stock Exchange with ASX (Australian Securities Exchange) and, we saw the offer from the London Stock Exchange for the Toronto Stock Exchange. So I think it’s a very logical step.”
The upstart trading platforms are faster and cheaper and have eaten deeply into the market shares of those traditional exchanges.
That has forced them to invest heavily in new technology and to look for ways of saving money through consolidation as well as find new areas of business such as derivatives.