The recent wave of exchange mergers marks an era of consolidation that will leave no more than four global trading firms in five years’ time, said Xavier Rolet, the chief executive of the London Stock Exchange.
Speaking against a backdrop of three deals in two weeks — the LSE’s purchase plans of Canadian peer TMX Group, Deutsche Boerse’s deal with NYSE Euronext and U.S. exchange Bats Global Markets’ acquisition of Chi-X Europe — Rolet said the merger frenzy had only just started.
“In five years there’ll be three, four international exchange groups with global distribution capabilities,” he told Reuters in an interview on Wednesday.
“The start of the second generation of consolidation in the exchange world is just that … We’re just getting started, guys.”
Global exchanges are scrapping for market share against cut-price trading platforms such as Bats and Chi-X, which have steadily eaten into the profits of the exchanges that once monopolised share trading.
Rolet said he was confident that the LSE’s planned takeover of TMX to create a $7.1 billion exchange group was well supported in Canada, though he expected “some tense moments.” But he questioned whether international regulators would wave through Deutsche Boerse’s planned takeover of NYSE Euronext.
“There’s going to be big competition issues, because between them, they control 93 percent of equity and index derivatives in Europe,” Rolet said.
“It cannot be said this is going to be anything but a monopoly, because it will be,” he added.
