This week, news reports revealed that merger talks are underway between the London Stock Exchange and Deutsche Brse. Aite Group senior analyst Spencer Mindlinand Traders contributor weighed in on what could become one of the largest stock exchanges in the global markets.
[Traders presents the Top Stock Exchange Mergers that trandformed the markets.]
The LSE and Deutsche Brse have been courting for years and have been unable to strike a strategic alliance or merger. The market has changed, though, since the last attempt between the two in 2005,” said Mindlin.
[Exchanges talk marriage while nations contemplate divorce.]
With all the new regulations to cope with following the 2009 G-20 agreements, MiFID II, and Basel III, a simpler European market structure will make it less challenging for investors to comply. On the other hand, cross-border stock exchanges can also create potential problems for regulators,” he said.
Generally, market consolidation results in greater economies of scale and improved access, translating into lower costs for investors. Both markets have strong electronic capabilities. If they attempt to integrate platforms, it is unclear which platform would emerge as the winner. However, a combined platform would be industry-defining,” he said.
The timing of the merger talks is interesting given the Brexit uncertainty, concludes Spencer Mindlin, analyst on the Institutional Securities & Investment team at financial research and advisory firm Aite Group.
