Investing October 30, 2001

European Exchange Consolidation To Continue

October 30, 2001(PLANSPONSOR.com) - Technological advances and the globalization of capital markets will force European stock exchanges to consolidate, resulting in a single pan-European clearing-house by 2006, according to industry professionals polled by Accenture.
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Increased competition, fragmented liquidity, redundancy, and eroding margins will also spur this consolidation.

That trend was in evidence yesterday, as Euronext, itself the result of a merger of bourses in Paris, Amsterdam and Brussels – won the fiercely fought battle for the Liffe derivatives exchange in London, Europe’s number two derivatives exchange. The London Stock Exchange’s failure to win Liffe now makes the LSE vulnerable to takeover, according to some analysts.

The Accenture study, titled “Leaving Safe Havens” concludes that many national stock exchanges worldwide may soon be a thing of the past. Cross-border collaboration will be more important than ever to build the efficiencies and liquidity necessary to survive changes in the global exchange landscape.

According to the study, which was based on interviews with European investment professionals, exchange and clearing consolidation will benefit:

  • investors by bringing better price discovery and a lower execution costs, particularly with cross-border trades,
  • issuers, providing easier access to global capital and improved liquidity,
  • exchanges, by enabling them to achieve economies of scale, build efficiencies in aggregation, leverage IT investments, reduce inefficiencies and offer better liquidity

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