Age of the Global Bourse

February 9th, 2011
in econ_news

International Trade 57131757 Econintersect:  Stock exchanges have remained largely national ventures with only one international exchange, the NYSE Euronext, which started operation just under four years ago.  Today (February 9) the LSE (London Stock Exchange) and the TMX (Toronto Montreal Stock Exchange) announced that the LSE will acquire the TMX.

Follow up:

  This will create the world's second largest international stock exchange, which will include Borsa Italiano, previously acquired by LSE.

From Securities Technology Monitor:

The London Stock Exchange Group and TMX Group of Toronto said Wednesday they would combine operations in “an all-share merger of equals.’’  The move comes five years after the Nasdaq OMX Group tried but abandoned an attempt to create a cross-atlantic exchange operation by acquiring the LSE Group. And it comes four years after the New York Stock Exchange and the pan-European Euronext exchange merged.

By domestic market capitalization, the combination of the LSE and TMX groups will jump past Nasdaq OMX in size, according to figures kept by the World Federation of Exchanges. The combination will still trail NYSE Euronext.

The new cross-atlantic group will have headquarters in London and Toronto, the merger partners said.

They will create a global listings hub and “international markets for businesses of all sizes.” The TMX Group, for instance, runs a venture exchange, that helps fund startups. It also runs the Toronto and Montreal exchanges, from which it draws its name.

The combined group also expects to be the primary listing venue for natural resources, mining, energy and clean technology companies.  Altogether 20 trading markets across North America and Europe will be operated by the combination.  The merger will create $56 million in revenue benefits and $56 million in savings, as well, the two firms estimated.

"We are today announcing the creation of a global leader in the exchange space,’’ said Chris Gibson-Smith, Chairman of London Stock Exchange Group. “We will be able to offer shareholders and customers a business significantly greater than the sum of our parts. “

Editor's note:  The extension of global bourses to include small developed and emerging stock markets will greatly increase the access of global investors to stocks in those markets.  This will increase individual stock competition for national market ETFs for smaller investors.

Sources:  Securities Technology Monitor and Bloomberg  

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