NYSE-Deutsche Boerse Merger: 4 Points
Even in the Florida Keys, traders were messaging me asking what I thought about today's announcement. Four points:
1. It makes strategic sense, particularly since the business is increasingly about options and futures. The NYSE already owns LIFFE, the European options and futures business, while the DB owns Eurex and the ISE...put them together and they will probably control 40 percent of the US options business
2. National security concerns are an issue but will likely be overriden. The NYSE already has substantial foreign ownership through EuroNext. 50 percent of its revenues are already overseas. Finally, the regulatory structure will remain intact. The part of the business done in the US will remain under the control of US regulators.
3. What's next? I've heard rumblings of Nasdaq-CBOE or even LSE-Toronto-Nasdaq, but most interesting would be the first pan-Pacific deal, perhaps the Tokyo exchange-which is already is close to the NYSE (they own almost 5 percent of the Singapore Exchange), or Singapore-Australia (they are in merger talks) and another US or European exchange.
4. Finally, the NYSE floor will likely remain. Despite garnering only 28 percent of total NYSE volume NYSE officials long ago recognized the floor as a brand differentiator. The NYSE is investing substantial sums to update and modernize the floor.
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