Another shattered taboo

After witnessing the largest deals for hundreds of years, stock exchanges are finally forced to do what the other companies, shareholders and managers did to survive – try to merge with or acquire other stock exchanges. Changes in the global economy are driving things toward this solution.

Euronext, the stock exchange that will rise from the merger of the Amsterdam, Brussels and Paris markets, would like to acquire the London Stock Exchange, the largest in Europe. London has allied with the German bourse, and to consolidate and protect itself, it is mulling an alliance with the second-largest US stock market, Nasdaq.

As a retort, Euronext plans to associate with the New York Stock Exchange, Tokyo, Hong Kong, Toronto, San Paulo, Sydney and Mexico to create a worldwide stock market.

Slowly and steadily, things are moving towards a global capital market that will trade 24 hours a day. Already such trading is happening. Late at night it begins in Asia, in Tokyo, throughout the day continues in Europe, and afternoon into late night, in the United States. But each stock market is on its own, integration is not here yet. Transfer costs between markets are quite high, and ample flows trigger ample currency fluctuations. Now everyone wants to be integrated in a single system.

These mergers and acquisitions between stock markets are the unseen face of backstage movements by major companies, banks and financial groups, and of the struggle between the great powers, the USA and the European Union.

Western Europe has realised that each state separately cannot stand up to the United States. First of all, economically. This is the reason why historic and national boundaries were forgone and the European Union was founded, with a single currency, the euro, to fight the dollar.

Now Europe would need a single stock market to engage into a fight with America and attract all the financial capital, dispersed throughout the Union.

The worst problem is that the most powerful stock exchange in Europe is in London, but Great Britain is not in the euro zone and its connections to the USA are much tighter than with Brussels. London is Europe’s most powerful financial centre, and what has been built here for hundreds of years cannot be easily shifted into the old continent.

The struggle for financial capital is fierce. The commodity on the stock market – companies – is moving to places where capital and major investors abound. For this reason, powerful European companies went to list in America, because one country in Europe, their country of origin, is no longer enough.

When you cross the ocean, you help America prosper. First of all, because you ask for dollars and thus help keep the dollar as the top currency. The power of the United States comes first and foremost from the dollar, from its being the best and most recognised means of exchange.

Now, the European Union would need something strong and unique, to lure large companies and keep them in Europe. This would help it draw capital from dollars to euros. And this struggle is pushing everyone to mergers and acquisitions, because there isn’t enough room for many competitors.

Tomorrow’s world will become global because economic interests are demanding it. And current developments are forcing stock markets to merge, doing away with taboos and traditions.