Stock exchange consolidation

Since the beginning of 2011 the Zephyr database holds 17 transactions of varying statuses in relation to both small and large stock exchange operating companies around the world. I do concede that seven of the 17 deals are still sitting as rumours, but excluding these the total dollar value of deals involving stock exchange operators as targets is over $13bn.

All things considered this is quite a frenetic start to the year, especially when compared to past activity.

The three years between 2006 and the end of 2008 was the last time that such significant market consolidation was seen, and interestingly the first few weeks of 2011’s consolidation activity has already accounted for over half the total deal value seen in each of the years between 2006 and 2007 through significantly fewer deals.

The two highest profile deals of the current spate of activity are: the $10.1bn offer for NYSE Euronext by Deutsche Borse (deal number 1601245425), a revisiting of discussions held back in 2008 and 2009 between the two parties, and the LSE’s $3.1bn offer for Canada’s TMX Group (deal number 1601245108). In addition to these two deals, yesterday Bloomberg carried a story updating a rumoured deal from late last year that the Tokyo Exchange is interested in merging with the Osaka Exchange (deal number 1633022799).
But not everyone seems to be happy with these recent developments – certainly this morning’s press is carrying stories that a number of the leaders of Canada’s main banks are concerned about the potential deal between LSE and the TMX, citing the deal as a possible step back in the development of Toronto as a financial services hub.

The NYSE Euronext / Deutsche Borse tie-up has been met with a more open mind within the financial community, with traders’ main concerns being that the combined entity and larger sphere of influence doesn’t drive up trading fees.

It remains to be seen if the regulators have differing views.