Ownership of Stock Exchanges

L

lukematt

The thread in the "Wall St. News" forum entitled "AMEX Has Been Acquired" got me to thinking...“How many markets does NYSE Euronext now control?”

Moreover, given the recent acquisitions of the Prague Stock Exchange and the Ljubljana (Slovenia) Stock Exchange, we should look at the holdings of the Wiener Borse.

Finally, during my research, NASDAQ’s name was frequently mentioned as a “gobbler” of international stock exchanges.


NYSE Euronext holdings

American Stock Exchange
Amsterdam Stock Exchange (and Liffe derivatives market)
Brussels (Belgium) Stock Exchange (and Liffe derivatives market)
Chicago Board of Trade Metals Complex
Lisbon (Portugal) Stock Exchange (and Liffe derivatives market)
London Liffe derivatives market
NYSE
NYSE Arca (options trading; formerly Pacific Exchange)
Paris Stock Exchange (and Liffe derivatives market)

25% of the Doha (Qatar) Securities Market


Vienna Stock Exchange holdings

(manages) Bucharest (Romania) Stock Exchange
Budapest Stock Exchange
Ljubljana (Slovenia) Stock Exchange
Prague Stock Exchange
(manages) Zagreb (Croatia) Stock Exchange


NASDAQ OMX Group holdings

Copenhagen Stock Exchange
Helsinki Stock Exchange
Iceland Stock Exchange
NASDAQ
Riga (Latvia) Stock Exchange
Stockholm Stock Exchange
Tallinn (Estonia) Stock Exchange
Vilnius (Lithuania) Stock Exchange

33 1/3% interest in Dubai (United Arab Emirates) International Financial Exchange, or DIFX. NASDAQ intends to increase its stake to 67%.

Rumored to have an interest in acquiring the London Stock Exchange. (The London Stock Exchange, in turn, already owns the Milan (Italy) Stock Exchange.)


Interesting Notes

• NYSE Euronext is a for-profit corporation that trades on the New York Stock Exchange under the symbol “NYX”.

NASDAQ OMX Group is a for-profit corporation that trades on NASDAQ under the symbol “NDAQ”.

• Although NYSE Euronext’s website states, “NYSE Euronext brings together six cash equities exchanges in five countries and six derivatives exchanges”, I was unable to find a list of the exact exchanges on their website. My email to NYSE Euronext’s Customer Support (support@nyx.com) was never answered.

A similar situation prevails on NASDAQ OMX’s website, where its European holdings are simply referred to as “Nordic Exchange” and “Baltic Markets”. I only found the exact exchanges in a note to their 10-Q.

During my research, I got the impression that NYSE Euronext and NASDAQ do not want to make their holdings perfectly transparent.

• If there’s a graduate student in our midst who needs a topic for a dissertation, I would propose pursuing the ownership links in all of the world’s stock exchanges.


Sources

• NASDAQ OMX Group, Inc. (symbol: NDAQ) Form 10-Q for quarter ended June 30, 2008
• NYSE Euronext (symbol: NYX) Form 10-Q for quarter ended June 30, 2008
• Wiener Borse website
• Wikipedia entry for NASDAQ
• Wikipedia entry for NYSE Euronext
• Wikipedia entry for Wiener Borse
 
Good post....

What is particularly interesting at this point is to be able to enter the market as a legal exchange....and thus offer an electronic fiber optic fast network which ties into all markets....

Lets call it BATS....

http://wallstreetpit.com/bats-trading-receives-exchange-status-from-sec/


http://www.forbes.com/2007/02/05/bats-nyse-nasdaq-biz-cx_mw_0205bats.html

BATS has the right business model to setup a universal exchange for very low transaction fees....

They are in Kansas City....not Wall Street ...and took a significant amount of transaction business away from the NYSE and Nasdaq....at record speed...less than 18 months....

And will do the same in Europe and Asian markets....

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Which just goes to show that a little bit of money can change the way securities are traded.....

And seeing how an educated public demands more efficiency....there is no looking back....
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Of course the good ole boy Euro networks will not like it....

Do you think the NYSE liked the Townsends ARCA ?

And then BATS blasts ARCA just because the NYSE wanted to charge a little more ?
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Also noting that other companies like BATS are sure to form which will sooner than later provide worldwide low cost access from true universal accounts by which IB has already started .......

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So the real test comes to firms like GS....do they want to invest in the most efficient and proven business model that is certain to enter and control markets....or not ?
 
libertad:

Thank you very much for your reply.

I will keep an eye on BATS.

If BATS wanted to be very special, they could offer access to international exchanges that are NOT readily available. NYSE, NASDAQ, Europe, and Asian markets are passe. :)

How about Middle East markets such as Dubai? Currently, I do not know of a way to trade UAE stocks online.
 
In 2005, before the most recent flurry of acquisitions, the BATS “exchange” (http://www.batstrading.com) was created because “market innovation and technology leadership were at risk due to over consolidation in the Exchange industry”.

I look for more nefarious factors. Here’s my secondary concern about the “consolidation”.

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On another discussion forum, a university professor who studies the microstructure of markets asked me four technical questions about the Prague Stock Exchange, including:

"d) Are there institutionalised trading halts for extreme price volatility (some exchanges put that in placed since Oct 1987)?"


Here's my reply:

"I couldn’t find an answer to this question on the Prague Stock Exchange’s website, so I sent an email message to their Information Service (info@pse.cz)

On August 25, 2008, the Prague Stock Exchange sent this response to me:


We don't have common trading halts due to extreme price volatility.

Best Regards,

Jan Kavka
Externí komunikace / External Communication
Burza cenných papírù Praha, a.s. / Prague Stock Exchange
Rybná 14, 110 05 Praha 1
Tel.: +420 221 832 172
Fax: +420 224 814 193
kavka@pse, http://www.pse.cz “



Three weeks later, the Prague Stock Exchange halted trading of the stocks “ECM” and “NWR” multiple times in a single day “due to the price decline”.

Since those first trading halts on September 16, 2008, the Prague Stock Exchange has halted trading with reckless abandon in various stocks (remember—there’s only 14 companies listed on the Prague Stock Exchange).

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A colleague in Dubai and I recently discussed “dirty tricks” that are used during bear markets. We thought that the Securities and Exchange Commission’s ban on short selling of selected stocks only a few days before the markets started to crash was an interesting “coincidence”.

By the end of our discussion, we concluded that, in general, trading halts are probably the most prevalent dirty trick used during bear markets.

Who controls trading halts? The exchanges.

From my perspective, if a group of manipulators intends to fiddle with the markets, I want their deeds to be as difficult to accomplish as possible.

Which arrangement do you think this group of manipulators would prefer? Each stock exchange managed by a different executive team OR a multitude of exchanges controlled by only NYSE Euronext, Wiener Borse, and NASDAQ OMX Group?
 
Please continue your study...as it is both very important in that stocks have the key to the most efficient capital available....as well as the best vehicle for wealth distribution.....

First let's think about stocks, and other paper representations on the exchanges as electronically time stamped buy/sell entries that occur in the corresponding business hours....

The investment bank model has failed partially to the fact that now it costs almost nothing ot transfer a name on stock shares on an electronic basis......ie whereas before one would call a broker....the broker would write a ticket....and then walk the ticket to a clerk....who would put it in her stack.....and would check off whether or not the shares should be delivered as a certificate.....whereas a few hundred shares could cost several hundred dollars....

Now....ie with Genesis Laser....one owns the shares in approximately a second....for less than a couple of dollars....from any personal computer....anywhere in the world....

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BATS has already proven that an exchange is really just a few computer banks that have reliable access to the internet....
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The exchange should really become more like a telephone company....providing reliable connectivity...whereby electronic name labeling is the core business ....the funding lines coming from clearing facilities could be supported by any bank.....
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Information about stocks.....

The dissolving investment bank's last legs has had the priviledge of better information in terms of where the shares are held...and how much was paid....while trading their own account.....information not known to the public....
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Thus information about company facts was available to everyone, but important information about who owned and at how much....was the core info held dear by investment banks....and they could trade their own money.....versus these positions....
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The market should move to a singular electronic exchange which reliably changes the labels, which is available to all in the same manner....and information should be periodic fact based....available to all.....

etc..etc...will build on this later.....
 
Continued....

So.....a stock that is shown on an exchange has a limited cheerleader group, who believes in the value of the shares.....
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The investment banks which give birth to stocks......still charge far too much money to list a firm.....A parallel would be real estate.....There is no reason for a boiler plate transaction to cost several percentage points of the price.....

There is no particular brilliance in filling out boiler plate forms.....one does not have to go to college to do this.....

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Wiki has proven itself to be a very valuable means of getting information.....There should be a stock-wiki that has timely earnings information.....
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It is hilarious and both entertaining to see all the people cheerleading their books on Bloomberg and other forms of public media.....They also never state just why one should even listen to their blabber......but....they serve an invaluable purpose in pointing out the differing points of view which in turn lead to liquidity........on both sides....
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If one can make a telephone call to anywhere in the world....one should be able to trade a stock anywhere in the world......by just a click of the mouse.....and this should be a seamless event....
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But make no mistake...the investment banks both give birth....and try to remain the house in the gambling casino.....by virtue of having information that the other players simply are not privey to.....

This is still the way it is....the owners of the exchange...are indeed privey to it by default.......and sell the idea that I have it ....but I am not going to use it against you.....

ie...Goldman Sachs does not get money from themselves........

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People blabber all they want....but they vote with shares.....
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The bottom line is that a worldwide stock exchange needs to emerge that serves the interest of all participants better than the one that exists today...that allows the exhange to be what it is meant to be.....which is just an electronic name transfer mechanism on the ownership of shares.........
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All the opinions/votes about stocks should be other businesses that do not own the exchange....
 
libertad:

Believe it or not, you and I agree MUCH more than we disagree. :)

Quote from libertad:
The exchange should really become more like a telephone company....providing reliable connectivity
More...
Yes!!!


Quote from libertad:
The market should move to a singular electronic exchange which reliably changes the labels, which is available to all in the same manner
More...
Yes, BUT...

I do NOT think that's the motivation behind the consolidation in NYSE Euronext, Wiener Borse, and NASDAQ OMX, which is a consolidation of control. Moreover, there will always be at least two entities to give the public the (false) impression of competition. (Just like there's two main political parties)


Quote from libertad:
If one can make a telephone call to anywhere in the world....one should be able to trade a stock anywhere in the world......by just a click of the mouse
More...
Amen! However, it will NEVER happen as long as the wrong people (my former employers :( ) control the financial markets.

One example--the "deep discount direct access broker" Interactive Brokers. If you look at their “Trading / Exchange Listings” web page, you will not find one “Middle East” market. They don’t even offer trading on the Prague Stock Exchange.

Strangely enough (ha ha ha), Czech online brokers offer basically the same list of international exchanges (they do offer the Prague Stock Exchange, though :) ).

In other words, the "Powers That Be" will always want to be the "gatekeepers", dictating where we can trade and where we can't.

I'll post another reply in a minute with more examples.
 
During Winter break 2006, my family took a scuba diving trip to Egypt.

When we returned to the Czech Republic, I thought to myself, “Why don’t I see about buying shares in some Egyptian companies?” Thus, in the early part of 2007, I began to investigate. What a fortunate surprise!

I discovered that the “Middle East” markets were down HUGELY. Like 80-90%.

After considering several factors, I decided to buy shares in a Saudi bank. (I don’t remember the exact name. It’s not the main point.)

Therefore, I telephoned to my broker at Smith Barney, a subsidiary of Citi, to place an order. Initially, he took my order. However, he soon returned my call to say, “We don't trade shares on that market because we don't have a person on the ground there”.

In the age of automated transactions (I can get to the Saudi Stock Exchange [Tadawul] right now via the Internet), that's a lame excuse. For Citi, one of the largest financial companies in the world, that's a lame excuse. Somebody was buying shares in Saudi Arabia at those ridiculously low prices.

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A few years further back, I accidentally came across a list of Slovak companies that trade on American markets. I was elated to discover that the list included an excellent Slovak pharmaceutical company named "Slovakofarma". I called my Smith Barney broker to place an order for Slovakofarma ADRs. However, he told me, "Only investment banks are allowed to buy those shares".

Several months passed. Then, a story appeared in the Czech and Slovak media that a normal worker at Slovakofarma had accumulated a majority holding in both Slovakofarma and the largest Czech pharmaceutical company named "Leciva". He combined these companies into the now-named "Zentiva".

I should believe that a normal worker had the resources to organize U.S. investment banks into two significant takeovers??? Yeh, right.

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Even further back (the old memory gets very fuzzy now), I wanted to invest in the Johannesburg (South Africa) Stock Exchange when it was down.

At the time, I sometimes used one strategy where I would make a minimum investment in a fund, listen to the fund’s comments about companies in their portfolio, then buy shares in specific companies that I liked. (Note: Although this strategy still has its merits, I’ve abandoned it.)

Well, as I researched equities funds that specialized in South Africa, I discovered—much to my chagrin—that the “price of admission” for individuals was consistently in the millions of dollars! Needless to say, my strategy and these funds were mutually exclusive.

Later, of course, I read in the news media that the Johannesburg (South Africa) Stock Exchange had seen consecutive years of 30-50% returns.

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The Prague Stock Exchange—individual foreigners who did not reside in the Czech Republic were locked out during the best years (i.e. when the original 1700+ companies still were listed).



I think that my point is clear. libertad, you and I share the same ideals--"The market should move to a singular electronic exchange which reliably changes the labels, which is available to all in the same manner".

However, I don't think the nature of the "Powers That Be" will ever be good enough to allow a level playing field for everyone.
 
I see....

But this is why BATS is so important.....

ARCA demonstrated first.....that the ECN works so efficiently....that it forced the NYSE's hand....and when the NYSE did not want to utilize the full efficiency of the program....by allowing specialists to continue to game the system...they immediately in a matter of months lost market share to BATS....

BATS is not in New York...it is in Kansas City ....thus it proves that it makes no difference where the computer banks are.....and it also proves that an exchange is a relatively low cost endeavor.....

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No interest, non obligatory debt is the most efficient capital in the world.....and it needs to be protected....

The companies to be listed need to have standardized boiler plate accounting and reporting requirements, as well as a business plan, and adequate description about the company....

There is no need to pay all the unecessary lawyers and accountants...trying to get percentages of the value of the stock....

The internet would serve as the total and complete access to stocks and anything one wants to know about them....

Also...the margin risk needs to be changed....What can most easily be done is to simply offer 1x.2x.3x.4x shares....there would be no margin accounts per se.....and there would be no account minimum.....To effect a trade of 100 shares should cost no more than 20 cents....

Thus far more efficiency could be had by standardizing accounting and reporting....and to make access to the exchange universally available.....ie through banks or approved financial firms....

The information companies which also manage businesses cannot be businesses comingled with the ownership of the exchange......

What happens next would be to eliminate all taxes worldwide on all stock transactions.....

This would go a long way to the fairer distribution of wealth....and would make stocks a part of everybody's financial lives....

In effect, the exchanges should be adjoined internet communications firms.....maybe even a company such as GOOGLE would be the best route.......
 
Furthermore....it has been proven that the investment banking firms do not know how to manage money.....

Proof positive....look at today's losses....for themselves and their clients....

And this is with all of their advantages...ie seeing positions and prices no one else can see....the list goes on....

Who in their right mind would want some bank/investment bank managing their money today ?

It has proven that each individual needs to learn about the market and how to invest/trade on their own....otherwise...stay away....these folks are not your friends...they do want your money....with a smile....the oldest game in town....

Thus a world wide truly universal exchange deserves implementation....

Too many conflicts of interest in the prior business model....even including government employees waiting in the wings to move away from the G-scale to the corporate pay scale......

Time to clean house....worldwide....
 
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