Future for Stock Exchanges

Been a big week for stock exchanges with merger news. What does it all mean and what about our comments and prediction in October blog entry about the Austrian/Singapore merger. Was it too rash
I am starting to regret the blog entry penned on 28th October 2010 (Future for the NZ Stock Exchange). You can see the entry in the blog list .

What a week it has been for stock exchanges round the world.
  • The London Stock Exchange has announced plans to merge with Canadian exchange TMX (LSE shareholders to control 55% of the combined business).
  • Deutsche Boerse and NYSE Euronext have revealed marriage plans
  • The Hong Kong Stock Exchange, has advised it will "consider international opportunities for alliances, partnerships and other relationships that present strategically compelling benefits consistent with its focus on markets in China”....

One does wonder where it may all end. Is this a sign that trends will see us moving to - some time away no doubt - one giant global exchange?

Our prediction of Octobers blog entry that the Australian/ Singapore exchange merger would not go through is now looking well wide of the mark. However the point also made in the blog about the effect on nearby financial market does I think still hold true. I suggested that the effect on NZ’s financial services market as a whole may not be wholly negative giving the example of Scotland’s relatively healthy financial sector and its close proximity to London.

News suggests that there is still an ambition within NZ to develop a Financial Services hub and backoffice services, however given consolidation seems to be order of the day for exchanges this ambition will need to to be translated into some meaningful results sooner rather than later if it is to be realised. An adage I learnt from business school - a long time ago - was a business need to get big, get niche, or get out. This I think is true for the likes of NZ and the niche approach is largely where Scotland has has its success. NZ could thrive in Financial services if it develops a reputation in niches and particular areas of expertise as clearly it cannot compete on size alone. Lets hope that the Capital Markets Development Task Force comes up with a workable plan quickly and the government and industry leaders translates this into action.

Resolution for 2011- be more careful with predictions Winking