Exchange Mergers: A Whole Lotta Hype

Anthony Malakian, deputy editor, Buy-Side Technology

As a columnist, there are two great perils. The first is that you write about something where it's obvious (to your readers anyway) that you don't know what you are talking about. Since I walk that tightrope everyday, I tend to ignore that particular hazard of the job. Ignorance is bliss, and all that.

The second danger is expressing an opinion that is ultimately proved laughably wrong. Still, it's better to have a wrong opinion than no opinion at all, right? Since I'm not a shockjock and don't write things simply to get a rise out of people, I concern myself more with this aspect of the job.

At the risk of opening myself up to ridicule, I have to say that all these exchange merger talks are pure hot air. My theory is that, at worst, the exchanges are using all this speculation as a form of one-upmanship over their competitors, while at best it's a poorly disguised attempt to bag a desperate seller.

After the New York Stock Exchange-Deutsche Börse and London Stock Exchange-Toronto Stock Exchange mergers, the consensus was (when the news broke) that these two moves would be a prelude to a wave of consolidation across the globe. Yet two months down the line and it's starting to appear that this is all just hype, for varying reasons.

For example, the Singapore Exchange and Australian Securities Exchange talks appear to have fallen apart because the Australian government says the merger would not be in the best interest of the country. Then there was speculation that Nasdaq and the IntercontinentalExchange would partner to acquire NYSE Euronext, but those nascent inquiries/rumors proved unfounded.

Additionally, over drinks and in recent private meetings, I heard rumors that the Tokyo Stock Exchange was looking for a partner after its Arrowhead platform hadn't enticed the volume of foreign high-frequency traders it had hoped to. Many also speculated that the Chicago Mercantile Exchange would get involved in the wheeling and dealing, but so far, no dice.

Let's also not forget that it's not inconceivable that the New York Stock Exchange-Deutsche Börse merger could fall apart at any moment.

My point is this: This year is certain not to be the year of consolidation it was shaping up to be back in February. Therefore, someone please wake me up when something actually happens.



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