September Sadakazu Osaki Executive Fellow Nomura Institute of Capital Markets Research

Transcription

1 September 2006 Sadakazu Osaki Executive Fellow Nomura Institute of Capital Markets Research

2 International Reorganization of Stock s - 1 Europe Euronext Proposal for Management Integration NYSE Group United States Sept France Netherlands Belgium Acquired in Dec Completed in 2002 London International Financial Futures and Options LIFFE March 2006 NYSE Market Reorganized as Joint Stock Company Jan Nov Completed in Jan Lisbon Stock (Portugal) MTS SpA 60.37% MBE Holding Management Integration in Mar NYSE Arca Electronic Archipelago Approved as Securities in Oct Bonds Joint Venture of Euronext and Borsa Italia (Source Nomura Institute of Capital Markets Research 2

3 International Reorganization of Stock s - 2 Europe London Stock (LSE) Owns 25.1 of LSE shares (as of Aug Started Operations as Stock in August 2006 NASDAQ United States London, United Kingdom EDX London July 2000 ( Dissolved in Oct. 2002) NASDAQ Japan Joint Venture with Osaka Stock North Europe NOREX 1999 OMX Sweden Stockholm Stock Denmark Copenhagen Stock Management Integration in Sept OM HEX Established Renamed as OMX in Aug Joint Venture Derivatives Established in 2003 Acquired in 2001 HEX Finland Helsinki Stock Estonia Tallin Mar. 200 ( Dissolved at End of 2003 Mar ( Dissolved in Aug Completed Acquisition in Sept NASDAQ Europe NASDAQ Germany BRUT LLC Acquired EASDAQ Established as Joint Venture with Berlin and Bremen Stock s ECN Oct Iceland Stock Norway Oslo Stock Acquired in 2002 Acquired in 2004 Latvia Riga Lithuania Vilnius Completed Acquisition in Dec Inet ECN (Source Nomura Institute of Capital Markets Research 3

4 International Reorganization of Stock s - 3 Europe Deutsche Borse United States Frankfurt Place Holdings SWX Group Jan Eurex Holding Company of US Stock s SWX Swiss Stock Established in 2004 Eurex US Acquired in 2003 virt-x Established in 2001 as Joint Venture of SWX and Tradepoint Stock, a UK electronic Stock Derivatives (Source Nomura Institute of Capital Markets Research 4

5 International Reorganization of Derivatives s Euronext London International Financial Futures and Options LIFFE Friendly Acquisition in 2001 Listed Dollar Futures in Mar Competition Chicago Mercantile CME Eurodollar Interest Rate Futures S&P500 and Other Index Futures Currency Futures Shanghai Futures SHFE Comprehensive Alliance in Mar Tokyo Stock S&P/TOPIX150 in 2002 Alliance on 24-Hour Transactions of Futures Deutsche Borse Joint Venture Eurex Eurex US Chicago Board of Trade CBOT Taiwan Futures SWX US Futures Established in Feb Competition US Treasury Futures Dow Jones Industrial Index Futures Alliance in Aug

6 Recent Trend in Reorganization of s In the US, pressures from institutional investors for quicker execution of orders and resultant changes in regulations (Regulation NMS (National Market System)) have promoted acquisitions of electronic communication networks (ECNs) and proprietary trading systems (PTSs). In Europe, mergers have progressed between futures exchanges and cash market exchanges, as well as between cash market exchanges across borders. Mergers of exchanges do not mean mergers of markets. Each market is subject to regulations specific to each country, and standardization of transaction rules and listing standards has not yet been taken place. From the standpoint of investors and listed companies participating in the market, the significance of mergers of exchanges is unclear. It should be understood as moves by exchanges as management entities to stabilize and expand operating bases. Pressures from stockholders are also promoting reorganizations. 6

7 Limits of Measures to Strengthen Competitiveness Stock exchanges in many countries have implemented various programs to strengthen their competitiveness, but none of them seem to have been decisive. Winning new companies to be listed (not enough domestic candidates) Development of new products (apart from some growth of exchange trades funds,etfs, and real estate investment trusts,reits.) Diversification of trading methods and trading hours (lagged behind PTSs.) Linking exchanges (test cases in Singapore and Hong Kong have not come through.) Diversification into related businesses (systems, market information services, etc.) Probably seeking alliances with other exchanges because of awareness of limitations of their own measures. 7

8 Market Capitalizations of s and Market Sizes Market evaluations (market capitalizations) of exchanges as joint stock companies are not solely determined by the sizes of the market they operate in. 1 CME 15, ,272 (8) 1,221,106 (6) 1,912, ,522 (1) 13,310,592 (1) 14,125, ,280 (6) 2,706,803 (5) 2,901, ,411 (9) 1,054,999 (16) 465,285 6 CBOT 6, ,701 (4) 3,058,182 (3) 5,673, ,703 (3) 3,603,985 (2) 10,086, ,592 (22) 257,340 (26) 116, ,407 (12) 804,015 (13) 672, OMX 2,270 (13) 802,561 (11) 950, ,116 (5) 2,964,298 (20) 215,973 - (2) 4,572,901 (4) 4,426, , ,544 Notes: 8

9 Management Issues for Japan s s What is their plan to strengthen futures markets and promote development of new products? What is their view for diversification into businesses other than operating the market? How will they be involved in the international reorganization of exchanges? 9

10 What Is Required of Systems In the backdrop of diversifying markets for order executions and intensifying demand for best execution, exchanges are required to execute a large number of fragmented orders quickly. Algorithmic trades will be more popular in Japan, too. Overseas exchanges are upgrading processing capabilities and shortening response times. Institutional investors are looking for DMA (Direct Market Access). Roles of securities companies will be changing. As is witnessed in erroneous orders cases, the role of s market auditing is not merely for prevention of fraudulent trades. What should be the role of market auditing as further systemization progresses? 10