Looks like someone was reading my posts. Although this doesn't cover all the issues I mentioned last night it does show that the NASDAQ and NYSE Global are not going to be easy to set up and are not a done deal.
Global bourse plan gets cautious European response
FRANKFURT, June 8 (Reuters) - An ambitious plan by 10 of the world's top bourses to create a Global Equity Market (GEM) received a cautious response on Thursday from European players.
Conceived as a response to electronic networks and a possible merger of the Frankfurt and London bourses, the New York Stock Exchange-led Global Equity Market (GEM) is at such an early stage that no one can predict its success or failure, operators said.
Although fund managers welcomed an idea which might simplify global trading, they said low liquidity in share trading outside their home time zones may limit its attractiveness.
"Anything that reduces cost and improves liquidity is good," Jamie Sandison, European fund manager at Edinburgh Fund Managers said. But he added: "The adoption of consistent accounting standards -- that would be more significant."
My comments - NOTE: - this standard accounting practice is going to keep a lot of companies away because of the huge cost involved
GEM, to be created around the New York Stock Exchange, the Tokyo Stock Exchange, the Euronext alliance of Paris, Amsterdam and Brussels, as well as the Hong Kong, Australian, Toronto, Brazil and Mexican exchanges aims to create a global 24 hour market in equities.
It is expected to comprise 60 percent of total global equity, boast capitalisation in the range of $20 trillion and could have some 400 companies traded, mostly from the United States.
My comments - NOTE: - what is the use of a GLOBAL exchange if it is only made up of 400 companies and most of them in the US. With SEG global you will have access to 10's of thousands of stocks
Liquidity is key issue
A 24 hour global market has fired the imagination of bourse operators pressured by new Internet-based rivals, but low liquidity, a perennial problem facing stocks trading outside their home markets, is a major stumbling block.
"There has to be liquidity all the time rather than in peaks when the local market is there or we won't use it (the new global exchange). It's a wait and see situation," Steven Budge, investment dealer at Friends Ivory and Sime, said.
Operators pointed to mixed results from the Frankfurt bourse's move last week to remain open during U.S. trading hours, generating only limited extra business, mainly from retail investors.
"We are watching the German market to see if there is any benefit in us placing orders up to 8 o'clock or packing up at 5:30 p.m.," Budge said.
Deutsche Boerse said on Wednesday that the new late session has accounted for around 10 percent of total daily orders, a modest return given that trading hours have been extended by 30 percent.
My comments - NOTE: - If the companies don't see a benifit to this Global exchange they will not go through the large cost of filing, accounting changes, etc.
Bourse wars
GEM is the third bourse alliance announced so far this year after Euronext -- the Paris, Amsterdam and Brussels tie-up -- and iX, the London/Frankfurt deal.
Deutsche Boerse and the London Stock Exchange want to create Europe's biggest single stock market through a full merger rather than an alliance, putting pressure on the Paris-led Euronext.
The German bourse operator declined to comment on the GEM deal while the London Stock Exchange said on Wednesday the statement from the NYSE announcing the deal was "an interesting development."
For some operators, who welcomed GEM as an idea, the project's key flaw was precisely the absence of London and Frankfurt.
"I am a little surprised by the participants," Lee Cook, head of European equities trading at J.P. Morgan & Co.Cook, said. "It's a big drawback that the LSE and Deutsche Bourse and Nasdaq aren't involved."
Some commentators saw GEM as a hastily drawn alliance against the LSE/Frankfurt merger that will also include a joint-venture with Nasdaq.
"Whenever any two exchanges start to pair off, the others quickly come up with their own, more glorious union," the Financial Times said in an editorial. "Sadly, the fruits of these couplings tend to be meagre."
Influential German financial daily Boersen Zeitung struck a similar note, saying personal rivalry between the head of the Paris bourse, Jean-Francois Theodore and Deutsche Boerse's chief Werner Seifert played a part.
"Every step, every idea undertaken by Deutsche Boerse, or more precisely Werner Seifert, is imitated, polished up or driven to the point of absurdity on the Seine," it said.
Others pointed out that GEM was still only at the discussion stage, without even a preliminary agreement between the parties.
My comments - NOTE: - The press always writes the releases like they are a done deal and will be out next month. This above statement just goes to show just how far off these plans are. The NASDAQ/JAPAN has been several years in the making and now only has 7 stocks trading on it
"It's still much too early to make a comment until we see any details from the deal," a spokesman for comdirect, one of Germany's largest online brokerages said.
Much of the comment on the GEM proposals has focused on the likelihood that the widely praised trading system designed by the Paris bourse and used by its Euronext partners Amsterdam and Brussels would underpin the new alliance.
But some observers have also pointed out that there will be problems combining the floor trading system used by the NYSE with a global electronic exchange, whatever system is adopted.
My comments - NOTE: - most of the growth exchanges are NOT EVEN ONLINE YET. The big exchanges also have all these platform problems. I knew about NASDAQ's Global plans long before I got into SEG but never thought for a second it would fly in a big way because of some of the points mentioned above. Once again, in my opinion there will be a global exchange on day but it will only list the largest and most liquid stocks. This still leaves a very large market for SEG |
