The biggest day ever for mergers of stock exchanges provoked demonstrations in the actions of the operators of New York to Sydney and Sao Paulo as those arising from transactions in shares advance as the engines of growth.
Nasdaq OMX Group, IntercontinentalExchange Inc., CBOE Holdings Inc. and the BM & FBovespa SA – all of which run platforms derived from futures and options – recovered to 6.7 percent yesterday. Gains after the announcement of Deutsche Boerse AG, which is in talks to buy New York Stock Exchange, valued at nearly $ 10 billion and $ 3.1 billion bid for LSE TMX Group Inc.
While markets are created combinations that control the trade in companies worth more than $ 20 billion, or about 36% of the value of world stock market, which may prove more lucrative is the property of places of growth in trading options, futures and derivatives, whose profit margins are 57% more shares on the NYSE Euronext.
“We have not seen the end,” said James Angel, a professor at Georgetown University in Washington. “The margins in the future are juicier than in equities because of the compensation,” he said. “The return on equity is crowded because it is a kind of dog fight with competitors.”
Shares Rally
The merger of NYSE Euronext, owner of the New York Stock Exchange, Liffe NYSE and NYSE Arca Options, and Deutsche Boerse, which runs Europe’s largest stock exchange, would create a company that controls 11 derivatives markets according to the Association of Futures Industry. Deutsche Boerse in Frankfurt also has a stake in Eurex AG, which owns the International Securities Exchange. shares of NYSE rose 14 percent yesterday, the highest since December 2008, and Deutsche Boerse rose 3.1% at 10:03 am today in Frankfurt.
The participation of the new organization of futures trading market would be higher than the proportion of CME Group Inc., the product of the merger $ 9,600,000,000 of the Chicago Mercantile Exchange and Chicago Board of Trade which rose 0.5 percent yesterday. The merger will combine three of the nine U.S. options exchanges to overcome the Chicago Board Options Exchange as the largest market in the nation of the derivatives.
Nasdaq OMX rose 6.7 percent yesterday, the highest since May 2009 for the New York-based firm. IntercontinentalExchange, the largest credit exchange, rose 4.2 percent. The company, also known as ICE, based in Atlanta. CBOE recovered by 4.3 percent, its progress towards sixth. Sao Paulo-based BM & FBovespa, which has Latin America’s largest stock exchange, rose 3.6 percent.
Hong Kong, Singapore
In Asia, Hong Kong Exchanges and Clearing Ltd. said he is open to mergers, and its shares fell 1.7 percent yesterday and today by 4.9 percent for the biggest two-day drop since May 2009. ASX Ltd. rose 4.7 percent today, the most since Singapore Exchange Ltd. agreed to buy Sydney-based trader to trade in Australia for a $ 8,350,000,000 ($ 8,420,000,000) in October.
Lee Underwood, a spokesman for ICE and CBOE Gail Osten, NASDAQ Silvia Davi, BM & FBovespa Alcides Ferreira and the edge of the CME Group, Michael refused to comment on speculation that there will be more mergers in the industry. Atsushi Saito, president of the Tokyo Stock Exchange Group Inc., announced today that the No. 1 operator of the Japanese stock exchange is open to mergers, if there are good opportunities, reversing the position of the private sector from November against partnerships.
Earnings growth for the trade is being driven by derivatives, after more regulation reduces operating margins of stocks on the NYSE Euronext to 35 percent, compared with 55 percent for contracts whose value is linked to an underlying asset.
Increased profits
ICE is gaining greater profit margin before taxes by ensuring credit default swaps, insurance policies linked to the creditworthiness of companies and governments, its clearing banks do with the sale of securities fixed income and equities to institutional investors, the company said yesterday. Clearing is when a processor of payment guarantees for transactions and ensures the delivery of securities.
While shares can be traded across platforms, futures settled only clearinghouse in this market. That means that once the headquarters lists a contract, remains the only supplier. Deutsche Boerse owns Clearstream, the second largest European securities settlement and Eurex Clearing AG, which authorizes the equities, derivatives, repos and fixed income. Clearstream handles a record 10.6 million settlement operations in December, up 23 percent from the previous year.
‘Huge’ Growth
Derivatives have been one of the units of the fastest revenue growth for the trade, such as trading stocks slumped amid increased competition from alternative trading venues began in the last decade. sales of NYSE Euronext-listed equity trading fell 10 percent in 2010, while futures and options purchased unit 14 percent. On Nasdaq, revenues grew 30 percent in the fourth quarter, more than any other area.
“The growth of derivatives is enormous,” said Jon Najarian, co-founder of OptionMonster.com, which owns shares of NYSE, CBOE and CME.
The Chicago Board Options Exchange had the largest percentage of U.S. options in 2010, according to Options Clearing Corp. data. The exchange options can attract buyers because of its exclusive license to trade in contracts linked to the VIX, as the CBOE Volatility Index is known, and the Standard & Poor’s 500, said Najarian.
Nasdaq OMX, Hong Kong Exchanges and Clearing or BM & FBovespa may consider buying CBOE to expand its market share, according to Thomas Caldwell, CEO of Caldwell Securities Ltd. in Toronto, which with its affiliates, monitors about C $ 1 billion (one billion U.S. dollars), including Deutsche Boerse, NYSE, CBOE, LSE and actions TMX.
Forward rate
CME, the owner of the largest futures market in the world, controls 98 percent of U.S. futures trading, including contracts on the S & P 500 and has been growing by profitable every quarter since the three months ended March 31.
In 2007, the Chicago Merc is merged with the Chicago Board of Trade, the creation of CME Group, and offered futures trading on interest rates in the short term and long term. Binding of Deutsche Boerse and NYSE Euronext would do the same for Europe’s future interest rates, said Rich Repetto, an analyst at Sandler O’Neill & Partners LP in New York.
“One question is, what will the CME do?” Said Angel, a finance professor at Georgetown. The company can combine “to protect its own territory,” he said.
“What price?
For the Nasdaq, an acquisition is probably necessary to compete with Deutsche Boerse and the NYSE, said Sang Lee, co-founder and managing partner of research firm Aite Group LLC in Boston. In 2008, the operator of the New York Stock Exchange bought Stockholm-based OMX AB, the fifth largest stock exchange in Europe after two failed attempts to acquire the LSE. In April, the exchange announced plans to shutter its system of alternative euro pan-European trade, which was introduced in 2008.
“I see synergies if they merge with someone, but it comes down to what price,” said Jeff Middleswart, based in Dallas, who said he owns about 30,000 and 18,000 shares of Nasdaq trading in New York.
Both offers this week should help companies reduce costs, with Deutsche Boerse’s offer savings of € 300,000,000 ($ 411 million), the statement said yesterday. Deutsche Boerse plans to standardize the system of NYSE Euronext cash trading actions, a person familiar with the matter said Tuesday.
“The exchange business is a business of scale,” said Justin Schack, managing director in charge of analyzing the market structure of Rosenblatt Securities Inc. “You have the technology infrastructure for processing transactions, so that operations more can be processed better. And through the purchase of another group swap them all in a single technology platform, can generate significant savings. ”
BM & FBovespa
BM & FBovespa is ideal for the buyer, due to its derivatives trading, Najarian said Lee. Futures trading of interest rates helped lift the average daily volume in the BM of the company and the F segment by 71 percent in the third quarter last year, according to a statement from the BM & FBOVESPA. Bovespa volume, where commercial activities, increased 13 percent over the same period. The company increased net income by 50 percent in 2010.
Brazil is an active market and that it is an active exporter, as having a large grain exposure and so on, “said Najarian.” They have a warehouse and they are doing really well. ”
The company also collaborates with other exchanges, including holding a 5 percent stake in CME and agreements with OMX and Nasdaq Stock Exchange of Chile, Santiago. That should set the company for a merger easier with other markets, said Lee.
“The exchanges are struggling to some extent to try to find ways to grow,” said Lee. “If you want to continue to try to evolve, consolidation is the way forward.” The announcement of the agreement between the headquarters in London, LSE and Toronto TMX may have “triggered a second wave.”
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