National interest or political self-interest? – 6 April 2011
First Published Thursday, 7th April 2011 02:05 pm from Fidessa : Steve Grob
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Few can have missed the announcement that title="Australia to block ASX-SGX deal"
href="http://www.finextra.com/News/Fullstory.aspx?newsitemid=22434"
target="_blank">the proposed merger between ASX and SGX is
about to be halted by Wayne Swan, Australia's
Treasurer. He cites the deal as contrary to the
national interest which, of course, has been a concern raised by
the Canadian authorities in their review of the
href="http://www.londonstockexchangegroup.com/newsroom/2011pressreleases/tmxandlsegjoinforces.htm"
target="_blank">proposed merger between their own TMX Group
and the London Stock Exchange.
I
wonder if it's complete coincidence that both Australia
and Canada are in particularly sensitive political waters right
now. The Australian legislature effectively suffers from a hung
parliament and Canada faces close elections too. The challenge
for the politicians then is that for the man on the street these
deals do look like a sell-off of national assets and so there is
little political capital to be gained by approving them. On the
other hand, a look at the reduction in the domestic shares of the
href="http://fragmentation.fidessa.com/venuestats/euvenuestats/?venue=XLON&venuedesc=LSE®ion=EU"
href="http://fragmentation.fidessa.com/venuestats/?venue=XTSE&venuedesc=TSX®ion=CA"
target="_blank">TMX tells another story. title="ASX" href="http://www.asx.com.au/"
target="_blank">ASX, too, will face competition from
href="http://www.chi-x.com/apac/au/"
target="_blank">Chi-X later this year and so all
these venues run the risk of being increasingly marginalised. Now
is the time for these exchanges to bulk up and form global
alliances as it's unlikely they will reverse their
domestic fortunes. The concept of a national stock exchange may
fast become a quaint anachronism as capital markets continue to
globalise at an ever-faster rate.
When the
financial regulators of these countries first introduced their
domestic exchanges to the concept of competition, they should
have understood that the current wave of mergers was going to be
an inevitable consequence. Why should stock exchanges be any
different from airlines, automobiles or pharmaceuticals which
have all globalised to meet the practical realities of their
industries?
