Exchange merger mania barely stirs national pride

NEW YORK Fri Mar 4, 2011 9:04am EST

Representative Barney Frank (D-MA) speaks during the Reuters Future Face of Finance Summit in Washington, March 2, 2011. REUTERS/Hyungwon Kang

Representative Barney Frank (D-MA) speaks during the Reuters Future Face of Finance Summit in Washington, March 2, 2011.

Credit: Reuters/Hyungwon Kang

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NEW YORK (Reuters) - Foreigners swooping in to buy national stock exchanges -- those proud centerpieces of capitalism -- would surely meet fierce resistance.

Right?

"I don't see a problem," said U.S. Representative Barney Frank. "Are we supposed to be stupid that we don't know this is an international thing, that transactions are mobile and that they transcend borders?"

Frank, the senior Democrat on the House Financial Services Committee in Washington, bristled at the suggestion Americans should be alarmed that Germany's Deutsche Boerse (DB1Gn.DE) is taking over Big Board parent NYSE Euronext NYX.N.

"Nobody is going to be able to operate the NYSE, no matter who owns it and be exempt from SEC regulations, so what's to worry about it?" the lawmaker said at the Reuters Future Face of Finance Summit this week.

Frank wasn't alone in shrugging off the blockbuster merger, the largest of a rash of tie-ups that were unveiled last month. The nonchalance could come as a surprise for anyone awaiting fireworks after a frenetic few weeks of deal-making among some of the world's top market operators.

Also in February, the London Stock Exchange (LSE.L) bid for Toronto Stock Exchange parent TMX Group (X.TO), and alternative venues BATS and Chi-X Europe unveiled a big tie-up.

Late last year the Singapore Exchange (SGXL.SI) said it would buy Australia's ASX Ltd (ASX.AX) -- reviving a wave of bourse mergers after a quiet few years, and stoking some of the pride and nationalism that has scuttled such deals in the past.

While some politicians in North America and Europe initially took umbrage, including New York Senator Charles Schumer, most speakers at the Reuters summit who could have a say in blocking the deals met the topic with a veritable yawn.

"I think it's kind of a natural evolution," Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, said of the tie-ups. "It strikes me as a not unusual progression in the global consolidation of markets."

"The New York Stock Exchange building, that iconic symbol, will still be there," she said, adding that the SEC will focus on governance, ownership, and access to information as it reviews the NYSE plan.

WAVING THE FLAG

The international exchange tie-ups are being sold to shareholders and others as necessary to stay abreast of the inevitable march to a global, interconnected marketplace -- and to not be left behind.

At the Reuters summit, exchange executives left out of the merger frenzy provided some of the sharpest critiques.

"Countries are going to have ask themselves whether or not the capital formation business in their country is just part of a global network or whether they want their own national champions that are working on capital markets," said Jeffrey Sprecher, chief executive of IntercontinentalExchange Inc (ICE.N).

"That's a very difficult question to answer for most countries. And it will be interesting for all of us to watch how that plays out," he said.

In separate interviews, Ronald Arculli, chairman of Hong Kong Exchanges and Clearing Ltd (0388.HK), and Ned Phillips, CEO of trading venue operator Chi-East, predicted the mergers would likely succeed, but that resistance from regulators and others would alter some of the current tie-up plans.

Singapore Exchange CEO Magnus Bocker, meanwhile, facing mounting opposition in Australia, said he is not planning more concessions in the $7.7-billion offer for ASX.

While in Canada there are concerns that the TSX buyout will forfeit control of its capital markets, the reaction south of the border to the NYSE buyout appears more muted.

"Looking at it as a regulator, I'm not sure these mergers will profoundly change the way business will be done," said Richard Ketchum, CEO of nongovernmental U.S. watchdog, the Financial Industry Regulatory Authority (FINRA).

"In the end, from the standpoint of how U.S. business is conducted, the world doesn't change overnight any more than it did with respect to the earlier mergers with Nasdaq-OMX or NYSE-Euronext," he said.

(Reporting by Jonathan Spicer; additional reporting by Rachelle Younglai and Sarah N. Lynch in Washington, Paritosh Bansal in New York and Rachel Armstrong in Hong Kong; Editing by Tim Dobbyn)

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Comments (1)
Chazz wrote:
Let’s see, ‘Bang Me in the Bootie Barney’ is a gifted leader and politician with an impeccable track record of shining success. His greatest on-stage performance to date has been as Casey Jones, the main engineer of the subprime mortgage train wreck.

Who could forget that epic, where Barney slurred these now classic lines like a man who had a foreign substance in his mouth, “Fannie and Freddie (are) not in a crisis!” going on to say they are “fundamentally sound financially.” Perhaps he had a different ‘fanny’ in mind?

And who could forget this classic line that harkens back to words that Shakespeare could have written… ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.” Ahh, poor Fellatio, he knows me well.

Now Barney is at it again and SO… you gotta listen when he says, “I don’t see a problem…” (with foreigners swooping in to buy national stock exchanges) “Are we supposed to be stupid that we don’t know this is an international thing, that transactions are mobile and that they transcend borders?”

No Barney, we’re not ‘supposed to be stupid,’ we ARE stupid after all, ‘we’ keep reelecting you to represent and lead us. Now please pass the sweet-n-sour shrimp you silly goose!

Mar 06, 2011 11:31am EST  --  Report as abuse
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