Earlier this month, the announcement by the London Stock Exchange of its proposed acquisition of the TMX group Canada caused a flurry of excitement. The new entity that arises from this deal would boast about $4.1 trillion of trading volume annually. But it now appears that there is much more in store in terms of dramatic changes where the world’s top stock exchanges are concerned.
Merger talks are underway between New York’s own Euronext and the German Deutsche Boerse AG. If the deal pans out, this new mammoth will overshadow the LSE –TMX trading volume with an astounding above $20 trillion worth of trades in a year. The Germans will hold the lion’s share of the proposed merged entity and its headquarters will be based in both NY and Frankfurt.
However, the road ahead may have its bumps and blocks for the Germans and Euronext as the deal faces an unprecedented degree of scrutiny by U.S. regulators. No comments have been released on the issue from any official sources, leaving one to wonder what exactly the government feels about letting the Big Board go out of American hands.
One issue that may be a major concern is that the merger will give an uncomfortably large degree of influence over the derivatives market in Europe to the new entity. This market is indisputably one of the most lucrative world markets. The sagacity of knowingly giving one single entity a large enough clout to call the shots here is definitely one that is, hopefully, being questioned.
However, NY Mayor Bloomberg voiced his support for the merger in no uncertain terms, becoming the first public figure to break silence. He pointed out that the merger will give both the U.S. and Germany access to world markets at an unprecedented level. He believed that this would make the American market more competitive globally.
While U.S. lawmakers have maintained a complete silence on whether they are looking at the proposed deal favorably, there is not much news from the German end either. The only statements coming in from this end are that Frankfurt’s position as a global financial hub will be preserved while considering the proposal.
Meanwhile, the AMF had similar concerns about preserving the position of Paris as another global financial hotseat. Those who are keeping up with global financial news will remember that an earlier proposal to merge the Paris based Euronext with Deutsche Boerse failed. Perhaps this earlier fiasco is the reason the concerned officials are carefully staying away from making any promises too early in day, this time around.
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