Unrequited love is a sad sight to behold. Who was unlucky in love in 2011?
There have been a few. The most notable was an apprehensive advance on the Australian Securities Exchange (ASX) by its near neighbour, the Singapore Exchange (SGX). After a nervous engagement since October 2010, the ambitious Aussie was told to abruptly dump his would-be bride at the altar in April this year.
Then there’s the sad tale of the refined English gentleman who crossed the Atlantic in search of a North American partner. On the shores of Lake Ontario, the London Stock Exchange (LSE) thought it had found a suitable match among its peers in the form of an attractive young Canadian, the TMX Group, owner of resource-rich properties in Toronto and Montreal. Alas, these amorous intentions were shunned, with TMX swayed by a prospective local match with a budding young Maple, the acquisition consortium of 13 Canadian financial institutions.
Canadian regulators are currently reviewing the Maple transaction, with a final decision from the country’s provincial regulators expected in early 2012.
Sad tales indeed, but you know what they say about long-distance romances. Do local affairs end any luckier?
It seems so. After whispers of a secret engagement, the Tokyo Stock Exchange and the Osaka Securities Exchange finally announced last month they would take the plunge, setting a rather sudden date for a New Year’s Day wedding.
After TMX’s rejection, the LSE began looking closer to home, since recently adding UK-based multilateral trading facility Turquoise to its happy family. Having previously sent out mixed signals, the LSE has now entered into exclusive discussions with Anglo-French clearing house, LCH.Clearnet.
Meantime, a transatlantic beau was searching for a soul-mate. Franco-American NYSE Euronext – with its New York sophistication and its Parisian charm – found itself at the centre of a love triangle, with advances from two very different hopefuls. First Deutsche Börse made a pass that was favoured by NYSE Euronext, if not perhaps by the wider community. Then fellow New Yorker Nasdaq OMX, with the help of IntercontinentalExchange, became a rival for NYSE Euronext’s hand. Despite this temptation, a European union was proposed in February, but wedding arrangements have been far from smooth sailing, with the marriage being contested by a long list of market participants and exchanges, including the jilted Nasdaq OMX. A review by the European Commission’s Directorate-General for Competition is still pending.
So 2011 was a bust. What are the chances of a spring wedding?
Deutsche Börse and NYSE Euronext are still committed to each other, despite the objections of competitors. But in the harsh spotlight of anti-trust scrutiny they have twice been obliged to adjust their domestic arrangements in favour of a more open approach.
The Commission has been scrutinising the deal since 4 August 2011 amid concerns the combination of Eurex and NYSE Liffe, the European derivatives markets operated by Deutsche Börse and NYSE Euronext respectively, would create a monopoly, locking up the listed derivatives market.
Proposed remedies have focused on access to Eurex Clearing, to let competing derivatives trading venue operators offer efficiencies to their clients. Recent acquiescence sees the two exchange operators further divest some of their derivatives business and widen clearing access remedy for equity index and interest rate derivatives.
The LSE should be pleased as punch. The Brits are still sore at Deutsche Börse for blocking Turquoise from creating derivatives products based on the EURO STOXX index, of which the German exchange group is joint owner with SIX, the Swiss exchange group.
Either the merger remedies or the soon-to-be-finalised European market infrastructure regulation will provide London with opportunities to grow its derivatives franchise, but the LSE is taking no chances and has added another mate to its fold. On 12 December, the pater familias of Paternoster Square announced it had secured full ownership of index provider FTSE International, increasing its share from an initial 50%.
It remains to be seen which combination will bring the happiest ending, but it seems clear that the singleton strategy is not seen as offering satisfaction to shareholders.
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