Competitive pressures and regulatory changes have spurred merger activity among the Western stock exchange groups in recent months, but growth in the emerging economies means future M&A activity is more likely to involve emerging markets players.
This report explores the perspectives on the recent trends affecting M&A activity within the global stock exchange sector.
- Consolidation among the Western exchanges will move towards an end game, with the key hurdles to further M&A being political and regulatory opposition.
- Some specialist European and US exchanges have chosen to remain out of the M&A race.
- Sustainable trading margins and concentration on local capital markets have allowed these Western exchanges to focus on organic growth strategies.
- Recent European and US regulatory changes have on the one hand increased competition, while on the other, opened up new growth opportunities within the derivatives markets.
- Maintaining competitive IT platforms is paramount if exchanges are to continue attracting customers in what has increasingly become a buyers' market. Those that are constrained from engaging in M&A are likely to enter into technology sharing initiatives.
As the emerging market exchange groups build up scale through trading volume growth and greater levels of network integration, M&A activity in these territories is likely to accelerate over the next five years.