Need for cost cuts will drive exchange M&A
LONDON (Reuters) - The need to cut costs will force continuing consolidation among stock exchanges as they compete to offer clients a cheap one-stop shop for all their needs, an industry executive said on Wednesday.
While deals like NYSE's (NYX.N) (NYX.PA) acquisition of pan-European exchange Euronext and Nasdaq's (NDAQ.O) buy of Scandinavia's OMX have taken place in recent years, some exchange tie-ups are built around closer collaboration rather than out-and-out M&A.
The London Stock Exchange Group (LSE.L) and Tokyo Stock Exchange Group TSE.UL for example in October announced a joint venture to introduce the UK's junior market model in Asia by the end of 2008. But such deals may not be enough for customers.
"The strategic partnerships between exchanges I cannot see delivering that many synergies when you've got the biggest cost base being your technology platform," Richard Evans, Citigroup's (C.N) head of electronic execution, told the Reuters Exchanges and Trading Summit.
"To create partnerships between exchanges but not actually to achieve synergies on the platform -- I think there is a big cost reduction that does not necessarily take place in that situation."
Evans added that such a combination of platforms makes further mergers and acquisitions between exchanges necessary.
(Reporting by Mathieu Robbins; Editing by Andrew Callus)
