Since early 2011, the world's biggest exchanges have sought mergers to boost their scale and cut costs. Deutsche Börse AG and NYSE Euronext have agreed to form the world's largest equities-and-derivatives trading platform, a plan that could cut $400 million from their combined annual costs. And two fast-growing exchanges, BATS Global Markets Inc and Chi-X Europe, are set to merge in a deal that will produce a significant new player in European equities trading.
Smaller European exchanges, meanwhile, like those in Warsaw, Zurich, Dublin and Madrid, are holding their own. Some are pursuing niche markets, others capitalise on their unique ability to serve local corporations and help their shares get noticed. Indeed, the experiences of some exchanges suggest that much of the business of trading equities and derivatives in Europe remains closely bound by geographic and cultural ties. Listing in one's home market tends to attract more attention from home-company investors and news media, says Heinrich Schaller, co-CEO of CEE Stock Exchange Group, a holding company that owns majority stakes in the Vienna, Budapest, Prague and Lubljana, Slovenia, exchanges. "We give companies the opportunity to be internationally connected and nationally located", Mr Schaller says.
Smaller exchanges do have shortcomings: less liquidity for investors, for one, and less visibility on the global stage. Swiss-based Glencore International PLC, the world's biggest commodities trader, chose London and Hong Kong to launch its IPO earlier this year, rather than the Swiss Six Exchange. Still, some small exchanges see new markets opening up as a result of consolidation among their bigger rivals.
"Our view is that the more big players consolidate, the more opportunities there are for niche players to offer services and trading products", says Mr Schaller. His CEE Stock Exchange Group, informally led by the Vienna exchange, aims to expand its Austrian and East European trading and listings businesses in a bid to become the region's primary exchange venue, pitting it against Warsaw to become a regional hub for capital markets. CEE is open to investing in exchanges in the Croatian, Romanian and Serbian markets in particular. "When the opportunity presents itself, then we will be interested", Mr Schaller says.
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