With the emergence of Internet technologies and globalization, it seems inevitable that there will be continued consolidation of stock exchanges. That should mean more opportunities for investors — in terms of trading options — as well as lower costs.
There’s one problem, though: politics.
Because of the threat of a monopoly over the derivatives markets, regulators in the European Union have blocked the proposed $7.4 billion merger of NYSE (NYSE:NYX) and the Deutsche Börse. They own the Eurex as well as the Liffe, which are dominant in the futures markets in Europe.
As a result, the NYSE and Deutsche Börse have cancelled their deal.
In fact, there’s likely to be a chill in dealmaking, which could put pressure on incumbents such as NASDAQ OMX Group (NASDAQ:NDAQ) and others. Acquisitions have been key in finding growth, especially as trading volumes have trailed off. There is also tough competition emerging from next-generation electronic platforms.
Still, there are some large operators that should continue to do well, such as the CME (NYSE:CME). That exchange was smart to engage in aggressive deals and focus on the red-hot derivatives market.