Thesis: Analysis of the Efficiency and the Future of the Foreign Cross-Listing

III.3. A New Deal in the Stock Exchanges Industry

III.3.a. Mergers between Stock Exchanges

Few years ago began an important movement of concentration between stock exchanges operators, giving birth to leaders with activities in several countries or continents. The most representative example was the merger between the American Nyse and the European Euronext, forming the world leading stock exchange in terms of market capitalisation, volumes and number of listed companies. At the same time, were performed several other major operations such as L.S.E-Borsa Italiana, Deutsche Biirse-SWX and NASDAQ-OMX.

One of the main purposes of these operations was to create ?a truly global marketplace with great breadth of product and geographic reach that will benefit all investors, issuers, and our shareholders and stakeholders"⁴³. As the competition between stock exchanges has steadily increased, mergers allow to reduce costs, to optimize resources and to boost client numbers. For instance, rapidly after the merger L.S.E-Borsa Italiana which saw the English operator taking the control of the Italian one, 360 of the main Italian stocks joined the L.S.E's trading platform TradElect, therefore creating the biggest pool of liquidity in Europe.

And which could be the next step ? By going further in this perspective, why not proposing to clients a 24h-continuous trading with companies listed on three market places, e.g. Tokyo Stock Exchange, Euronext Paris and Nyse ?

New moves had been performed with the purchase by Nyse of a 5% stake in the capital of the Indian National Stock Exchange (2007), but also a 20% stake in the Qatar Exchange (2009).

As a consequence of these merger and acquisition operations, the AmericanScandinavian group Nasdaq-OMX has announced it will introduce a new plan in order to simplify and to promote multiple listings on its different stock exchanges (Nasdaq, OMX Stockholm, OMX Copenhagen, OMX Helsinki, OMX Iceland, Tallinn Stock Exchange, Riga Stock Exchange, Vilnius Stock Exchange, Armenian Stock Exchange). At the same time, the group plans to launch a new platform in London with the goal to compete against the L.S.E.

⁴³ John Thain, CEO of Nyse Euronext at the moment of the declaration

III.3.b. Strategic Partnerships between Stock Exchanges

Following the concentration movement described previously, stock exchanges are also signing partnerships in order to facilitate collaborations in various domains like the trading, the listings, the services and the technology. Recently, Nyse Euronext and the Tokyo Stock Exchange have entered into "strategic alliance"⁴⁴, paving the way for an eventual merger. Nyse Euronext has also made some moves towards the Doha Securities Market and other stock exchanges in the Philippines and in Malaysia. Meanwhile, Deutsche Biirse signed agreements with the Korean Stock Exchange (2007) and the Chinese Tianjin Exchange (2007).

After two partnerships with the Nasdaq and the L.S.E during the year 2007, the Tel-Aviv Stock Exchange (TASE) signed in 2008 an equivalent partnership with Place de Paris. The main goal was to "promote foreign cross-listing which would facilitate the intervention of foreign investor on each place. Up to now, about 60 had chosen to be dual-listed on TASE and abroad"⁴⁵. By signing partnerships with the main stock exchanges, the TASE aims at attracting companies through a foreign cross-listing in Tel-Aviv. In this perspective, agreements between authorities of both countries have been signed in order to facilitate the regulation recognition of both countries.