Following the failed merger between London Stock Exchange Group (LSEG) and TMX in June, Dan Barnes looks at exchanges’ strategies for growth and discusses the risks set for exchanges in becoming a target for takeover, as well as how the clearing landscape is set to change.
Given the LSEG’s visible solitude after the failed TMX bid, it now needs to consider a strong strategy for growth. GreySpark is of the opinion that to keep its independence, exchange group will need to obtain smaller regional exchanges.
Whilst the LSE has been lobbying for an open access model for licenses and greater fungiability of products on the clearing side, GreySpark points out that even if products were more fungible, meaning that the LSE Group were able to trade through their Turquoise Derivatives offering and clear through their post trade business, they would still have to pass back some of the fees to the venues who designed the contracts initially.
The article goes on to make further predictions on how the clearing landscape will change following the outcome of the decision on the NYSE Euronext/Deutsche Bank merger, and how it will set the precedent by easing access to platforms. Finally, the article concludes that LSE will now be on the prowl for potential exchanges to merge with.