Expanding its operational horizon in the Europe,
NYSE Euronext Inc.
) announced late last week the launch of its regulated exchange for
international listing - NYSE Euronext London. Rail tunnel company -
Group Eurotunnel is expected to be the first company to be listed
on NYSE London from July 19, 2012.
NYSE already has its diversified global stock and derivative
exchanges on both sides of the Atlantic, i.e, in New York (the US)
and Paris (Europe). The company's derivative business - NYSE Liffe
is also based out of London. Thus, another international listing
operation in London should boost the company's existing
efficiencies, whereas NYSE's modest liquidity and broader investor
base should pave way for newer revenue growth opportunities in
Moreover, given the economic turmoil that Europe is going
through, NYSE's establishment in London appears to be a strategic
step as most of the investors who are losing confidence in the
European markets, primarily the London Stock Exchange (LSE), now
have the option of routing their funds through NYSE. Banking on
NYSE's strong brand name, cost containment measures and
technological efficiencies, the launch of NYSE London also opens
doors for attracting potential initial public offerings (IPOs) from
new issuers along with shift of listings from European exchanges.
The company has been enjoying the highest number of listings over
the past several quarters.
London: The New Exchange Action Zone
Despite the sluggish global economic situation, NYSE is making
constant efforts to capture growth prospects in the new and
emerging markets, while also seeking to benefit from the
well-established but cautious markets. These efforts help the
company to leverage inter-asset class opportunities, optimize its
shared services infrastructure and effectively deploy its
At such a juncture, London has come out to be the new
competitive opportunity zone as LSE has become stationary and fails
to attract more investors given the lingering qualms over the
European debt crisis, concerns regarding which are intensifying by
the day. Hence, NYSE's new exchange is expected to give direct and
severe competition to LSE as the former is keen on setting a strong
foot in the UK's capital. Even Group Eurotunnel is shifting its
secondary listing from LSE to NYSE London.
Conversely, this is not the first time that NYSE has tried to
expand its presence in the Europe. Lately, the company failed to
successfully culminate its merger with Frankfurt-based Deutsche
Boerse due to regulatory hurdles, and also lost bid in the sale of
London Metal Exchange (LME). Hence, NYSE was ardently seeking to
expand its business in the Europe, and London appears to be a good
bet for this purpose.
Recently, more exchanges were noticed to have been strengthening
their market share in the London market, which is the trading hub
of Europe. Last week,
NASDAQ OMX Group Inc.
) also publicized its plan to build a new interest rate derivative
trading platform - NASDAQ NLX - in London. Subject to regulatory
approvals, this trading platform is scheduled to debut by the first
quarter of 2013.
Overall, intense competition defines the stock exchange industry
today, wherein the financial turmoil plays a spoilsport.
Consequently, volumes have weakened in all exchanges across the
industry. Thus, companies are impelled to reduce prices and margins
in order to gain or maintain their market share. However, we
believe that once the global economy stabilizes to its historical
highs, markets will gain traction, which in turn will be beneficial
to the global exchange industry.
NYSE carries a Zacks Rank #3 that implies a short-term Hold
rating, while the long-term recommendation stands at Neutral.
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis Report
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