Opening Cross: Love Is in the Air

It’s Valentine’s Day, and the financial markets are flush with romance, with exchanges performing their own version of Seven Brides for Seven Brothers, and with their market data divisions representing a valuable dowry.
Surprise announcements last week that the London Stock Exchange and Canada’s TMX Group have agreed a merger and that NYSE Euronext and Deutsche Börse are in talks on the same subject prompted some speculation that this year’s World Economic Forum meeting at Davos in Switzerland may have been a behind-the-scenes exchange love-fest.
And indeed, these proposed nuptials do reflect genuine affection for each other, rather than just leering at each other’s assets or some of the marriages of convenience seen across the industry in general in recent years. For while Asia has continued to grab headlines with the aggressive growth of economies across the region—and with activity including, notably, the recent engagement of the Singapore Exchange and the Australian Securities Exchange—exchanges remain an attractive business to be in, despite the emergence of younger and sleeker models in the form of multilateral trading facilities and aggressive new exchanges.
In fact, according to the World Federation of Exchanges, global equity market capitalization on regulated exchanges increased by 15 percent to $54.8 trillion in 2010 (though Asia-Pacific led the way with a 20 percent gain), while new IPO activity more than doubled in number and value. However, look beyond the equity markets (which only rose by 1.8 percent, according to the WFE), and you’ll see the value of these deals, in addition to their cross-border appeal: both proposed tie-ups have significant presences in both equities and derivatives, and, according to the WFE, derivatives trading rose by more than 20 percent in single-stock futures, stock index options and bond futures in 2010.
But not everyone wants to be part of this love-fest—although that doesn’t stop the rumor-mill churning. For example, Hong Kong Exchanges and Clearing last week issued a statement that it was unaware of the reason for unusual trading in its stock, and specifically denying—in light of the M&A activity among other markets—that it is involved in “any discussions with other exchanges or industry participants regarding mergers or alliances involving equity ownership.”
In HKEx’s case, the price movements may simply reflect the enthusiasm of canny investors counting on an overbearing “Tiger Mom” pointing out that with so many siblings paring off, it’s time to get hitched already. But be warned: don’t buy a wedding gift before you see the engagement ring. BATS Global Markets last week announced that it has extended its exclusive negotiations with pan-European multilateral trading facility Chi-X Europe for an undisclosed period, whereas the two had previously been expected to wed or get off the love seat by last Friday, Feb. 11 (IMD, Jan. 3). For these young lovers, with so much ahead of them, and so much to bring to the table, it looks like a case of “when” rather than “if”—perhaps depending on the price tag of the rings and reception.
But sadly, not all things last forever, and it’s with a heavy heart that IMD bids farewell to deputy editor Jean-Paul Carbonnier, who—after more than four years with the publication—has accepted a new position at Thomson Reuters. We wish JP every success in his new endeavors, and hope to name a replacement shortly.
Meantime, I’ll await the save-the-date cards from LSE-TMX and NYSE Euronext-Deutsche Börse, and wonder if it’s a coincidence that these groups have operations, respectively, in the popular bachelor party locations of Montreal and Amsterdam. And by Valentine’s Day next year, we’ll see if opening bells are the only bells ringing for exchanges.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
Standard Chartered goes from spectator to player in digital asset game
The bank’s digital assets custody offering is underpinned by an open API and modular infrastructure, allowing it to potentially add a secondary back-end system provider.
Saugata Saha pilots S&P’s way through data interoperability, AI
Saha, who was named president of S&P Global Market Intelligence last year, details how the company is looking at enterprise data and the success of its early investments in AI.
Data partnerships, outsourced trading, developer wins, Studio Ghibli, and more
The Waters Cooler: CME and Google Cloud reach second base, Visible Alpha settles in at S&P, and another overnight trading venue is approved in this week’s news round-up.
Are we really moving on from GenAI already?
Waters Wrap: Agentic AI is becoming an increasingly hot topic, but Anthony says that shouldn’t come at the expense of generative AI.
Cloud infrastructure’s role in agentic AI
The financial services industry’s AI-driven future will require even greater reliance on cloud. A well-architected framework is key, write IBM’s Gautam Kumar and Raja Basu.
Waters Wavelength Ep. 310: SigTech’s Bin Ren
This week, SigTech’s CEO Bin Ren joins Eliot to discuss GenAI’s progress since ChatGPT’s emergence in 2022, agentic AI, and challenges with regulating AI.
Microsoft exec: ‘Generative AI is completely passé. This is the year of agentic AI’
Microsoft’s Symon Garfield said that AI advancements are prompting financial services firms to change their approach to integrating AI-powered solutions.
Inside the company that helped build China’s equity options market
Fintech firm Bachelier Technology on the challenges of creating a trading platform for China’s unique OTC derivatives market.