“If you think of London without the LSE, why would financial companies need to be located there?” he asked. With the current media focus on who takes over the LSE, speakers at the conference suggested that European bourses could also become vulnerable to M&A manoeuvres by exchanges outside Europe.
Mr Thieme said it was not out of the question that a Chinese exchange – possibly in the guise of the Shanghai Stock Exchange – could show interest in the LSE. After all, if a Chinese oil producer could make an unsolicited bid of $18.5bn (€15bn) for a US oil company (Unocal), “then why not Shanghai for the LSE”.
The focus on a total European solution for consolidation of the continent’s exchanges also ignored a possible threat from North America. Commenting on whether exchange rationalisation in the US might follow a similar pattern to Europe, John M. Damgard, president of the Futures Industry Association, said: “We support the move by the New York Stock Exchange to become involved in derivatives. And, we think that competition is healthy and good.“
In response to whether American exchanges would be potentially interested in acquiring an asset like the LSE or any other exchange outside North America, Mr Damgard added: “While I’m not privy to the strategic thinking of the Chicago Mercantile Exchange (CME), I think they are very much in an acquisitive frame of mind. And, if they believe they understand markets worldwide then they would probably be interested in acquisitions outside the US.”
On US exchanges merging, Mr Damgard suggested that if the Chicago Board of Trade and the CME were to announce tomorrow that they intended to merge it would attract the attention of the US anti-trust authorities in the shape of the Federal Trade Commission and the Department of Justice. This would not necessarily be because such a combination would increase the monopolistic market power, he argued.
With regard to the question of whether some exchanges were too profitable, Mr George Gero, board member of the New York Mercantile Exchange believed that lowering fees could be counterproductive and would ultimately lead to uncompetitive exchanges.
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