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Having a stock exchange of your own – II | Advantage zyaada

The New York Stock Exchange on Wall Street, Ne...

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The NYSE shares get converted into the bigger board company for 0.47 shares of the DB NYSE group (name tbd) worth $4bn of the total $10 bln value

In the listed exchanges CME has a PE premium vs the rest of almost 2X while NYSE is headed to earnings of $3 per share on its own in 2011.

NASDAQ is trying to combine with the LSE in a much smaller deal  while the more interesting deals could now be in Hongkong SE


Deutsche Borse gets NYSE and all its parts after a decade of the same

The NYSE 10K for 2009 lists all the parts of the $499 trillion in Derivatives business and the 40% of the US Options business that NYSE does plus the equities trading from NYSE, Arca, Amex, Euronext and last but not the least Alternext with 135 listings and a total of around 4000 operative listings on the NYSE. NYSE Liffe as a derivatives exchange has been a huge success and in the meantime Deutsche Borse’s Eurex has also gained a lot of currency in the continent. Together, they new entity will finally give Deutsche Borse control with 9 board members out of 15 and virtually no liabilities outstanding on the combined NYSE Euronext entity except the severance of Clearnet that was paid out in 2009 to the extent of $260 million.

Even with Reuters and major banks sponsoring the Tradeweb that allows new Dodd Frank regulation on having all derivatives traded thru an exchange platform, the DB NYSE exchanges will hold a sizable 40% volume of the derivatives market as the $600 trillion from the FI market become exchange traded and thus listed thru a clearing and settlement house/ The LSE NASDAQ deals being relatively new and small in size he only other exchange platform to offer a global competition would much be a retailer like Charles Schwab and not an exchange or bank per se. The OMX NaASDAQ deal had offered more hope for the agile but with the monolith unlikely to get regulatory clearances quickly from the European masters, even this deal has not completed the last mile. However, learning from OMX’s export and the addition of private exchange platforms or even the budding merger of Asian ASX and SGX we can look forward o more integration and growing of mutualised or listed securities trading exchanges

However the Chinese exchanges are yet to come in play, there is a lot of OTC and even Alternext/Pinksheets volume there which has not been traded thru an exchange. Also the synergies and cost cutting are marginal in a game of low margins and volumes esp as after hours trading platforms haven’t stood up to be counted. Also the electronic clearing houses have to make themselves popular in the G20 friends we all have now. There is a lot of work to be done before we lose sight f that exchange at every step dream we were sleeping through most of the early millenium. Just 10 years ago there were virtually no ETFs or derivatives in Europe and the US markets were a distant mile away wit execution gaps ranging from 24-72 hours. There is another discontinuous innovation or two coming concomitant to its growth in the teens now.

Deal History

Deutsche Borse felt marginalised as early as 2000 and with the launch of the euro started publicising its efforts to be the stock exchange of Europe and work in tandem with the US markets esp out do LSE. Since 2003 it has been bidding for Euronext. See timeline here In bids to unite with LSE, form iX and sign up Euronext, DB has failed over valuation and leadership before paying up $6 bln for 60% in the NYSE group which is conveniently listed , but regulatory dilemmas are already to the fore starting with Schumer’s naming games..The board is 17 people, 10 from Frankfurt and this time the dual ownership is intact so far

A view from the Member's Gallery inside the NYSE

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