More Exchange Mergers; Regulators Should Say No! (NYX, NDAQ, CME, CBOE, ICE)

Banking, finance, and taxes

Published: February 9, 2011 11:35 am

Last Updated: April 28, 2020 1:56 am

Exchanges are already too powerful. Now comes word that NYSE Euronext (NYSE: NYX) is in advanced talks with Germany’s Deutsche Boerse. Shares were halted per the NYSE request. The good news for investors is that this has shares of the other public exchanges running up as well. We have already seen massive consolidation, and now this could set the stage for yet even more consolidation of exchanges.

The bad news here is that the world of financial exchanges could literally consolidate down into too few players that are too powerful. When is enough enough and when will a regulatory body out there finally recognize that large mergers are not usually that great? This deal would come on the heels of the recently announced London Stock Exchange acquisition of the Toronto Stock Exchange. Will regulators let that go through?

Nasdaq OMX Group Inc. (NASDAQ: NDAQ) is up almost 4% at $26.85 and volume has more than tripled a normal day’s volume to over 7.8 million shares.

CME Group Inc. (NYSE: CME) is up 2.1% at $307.30, but volume is light at 305,000 shares.

CBOE Holdings, Inc. (NASDAQ: CBOE), the most recent public exchange, is up a sharp 7% at $26.24 and volume is up 8-fold at more than 2.6 million shares.

IntercontinentalExchange, Inc. (NYSE: ICE) is up 2.3% at $120.95 and volume is already almost twice its normal daily volume at 1.35 million shares.

Does the NYSE need to be merged with the German exchange? It already has Euronext and AMEX. NASDAQ already has already made its overseas expansion. The futures exchanges have almost all consolidated. The power of the exchanges needs to be monitored.

Until a deal is announced by the companies, we will continue to treat this as a rumor. When NYSE asks for its own stock to be halted, it seems much more credible than a mere rumor.

24/7 Wall St. would like to add a parting thought here:

DEAR REGULATORS,
JUST SAY NO TO MORE EXCHANGE MERGERS, PARTICULARLY OF THIS SIZE AND SCOPE!!! HOW LARGE AND POWERFUL DO INSTITUTIONS (PARTICULARLY EXCHANGES WHERE INSTRUMENTS ARE TRADED) NEED TO BECOME AFTER THE FINANCIAL CRISIS WE WENT THROUGH?

JON C. OGG

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