Will Hurt The Competitiveness Of Stock Exchanges ?
It seems that this year will be a historic time in the history of the worlds many stock exchanges. Never have the financial spheres of these different markets seen such a period of consolidation. For the majority of people this is seen as the beginning of an era of great prosperity. However, there has been another school of thought which has emerged. This school of thought stresses the fact that with less stock exchanges in the world there will also be less competitiveness between the remaining exchanges. So what does this spell out for the future of the stock exchange and is this something we really need to worry about?
With the major stock exchanges consolidating there would indeed be a less competitive nature, but what effects would this have? Some believe that this kind of consolidation will give the exchanges carte blanche to increase fees and regulations. Corporations will be forced to choose from an already small number of exchanges. This type of activity which may happen will undoubtedly stifle the business environment and may ward off small corporations that would normally go public. Many feel that if this trend of mergers gets out of hand that these exchanges will have a harmful amount of power and control. Although this is a valid arguement the majority of people see things differently.
Consolidation is necessary. Many believe that this is an inevitable effect of globalization. Consolidation needs to happen in order for many of these exchanges to be able to compete on a level playing field. As the developing world emerges so to will new market places. While somebelieve that world exchanges in the future will consist of only a handful of major exchanges. You may have been inclined to agree with that statement before this summer. However, the developing world is opening new doors. Borse Dubai literally came out of nowhere to start a bidding war situation with Nasdaq for the Stockholm Nordic exchange OMX. This trend coming from the new wealth in developing nations is sure to continue.
It is safe to say that although stock exchanges are increasingly gaining in size and power, competitiveness is here to stay. With great growth in the developing world will also come new elements to the worlds markets which create an evermore healthy business environment.One thing that everyone can agree on is that we are entering a new era.
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