Liquidnet, the institutional equities marketplace, comments on possible merger of Deutsche Boerse-NYSE Euronext:

 

• It is not clear to us how these deals will bring back market share or even help to reduce market share losses for the exchanges.

• While exchanges are vital for price discovery, the quantity discovery mechanism is one the exchanges have struggled to deliver.

• Attempts to add dark trading to exchanges over the past few years have shown mixed results at best. In general, exchanges globally have struggled to incorporate a non-displayed offering that can meet the needs of the institutional investor looking for size while reducing market impact.

• Liquidnet recently signed a deal with the SIX Swiss Exchange to create a joint block trading facility. We are also in discussions with a number of exchanges around the world to pursue somewhat similar arrangements, all of which will enhance the institutional market we have built for our Members over ten years, in addition to the exchange agreements we already have in the US.

• As these exchanges merge and take time to integrate their systems and realize cost savings, they still need to evolve to better serve the needs of institutional investors alongside their other constituents. One way to accomplish this goal is by partnering with firms like Liquidnet to bring price and quantity discovery together in a way that improves the market structure for all.

Press release