<Bz54>A trans-Atlantic stock market?
NEW YORK (AP) — This coming week could mark the beginning of a brave new world for individual investors as the New York Stock Exchange and Euronext NV move closer to forming the first trans-Atlantic stock market.Shareholders in both companies vote on the NYSE’s $13.7 billion deal to acquire Paris-based Euronext, marking the culmination of a long campaign to convince big hedge funds and other institutional investors on each side of the Atlantic that the transaction not only makes sense, but would be profitable.
And, as the deal moves toward final approval early next year, a growing number of individual investors are curious about how the deal might affect their own trading strategies. Top executives at some of the largest US discount brokerages say they’re increasingly being asked this question — and believe that mom-and-investors traders are in store for a trading renaissance.
“By bringing the different exchanges together and doing a good job of integrating, you create synergies and productivity,” said TD Ameritrade Chief Executive Joe Moglia. “By definition, you will provide to the individual investor best of breed services.”
Certainly, one day in the future, stock exchanges might be able to clear regulatory hurdles and offer investors around the world the ability to trade real-time 24 hours a day. A US investor, once restricted mostly to American listed stocks, might easily be able to push a button, and buy a few shares of a company based in Africa or China.
All of this might be a decade away, Moglia admits. “It’s not going to happen right now, but that’s not as important as the benefits individual investors will get in the near term.”
Cooperation between the NYSE and Euronext in technology is expected to make matching buyers to sellers more streamlined. Currently, online and discount brokerages take orders from investors and shop them around to hundreds of so-called market makers, which is a brokerage that stands ready to buy or sell stocks.
Speeding up this process would mean individual investors get better prices. Further, it will add more liquidity into the market and make transactions more transparent.
“All of this new competition between the exchanges ends up helping the individual investor at some point,” said E-Trade Chief Operating Officer R. Jarrett Lilien. “Investors can benefit over time because there will be more products, more education, and the ability to trade will become easier.”
The combination of NYSE and Euronext will likely give investors easier access to stocks that trade on exchanges in Paris, Amsterdam, Brussels and Lisbon. Similarly, Nasdaq Stock Market Inc. can do much the same if its $5.3 billion hostile offer for the London Stock Exchange is successful.
NYSE will also likely offer investors a broader selection of exchange traded funds, commodities, and options because Euronext also owns the Euronext.liffe international derivatives exchange.
“When these two come together, they might find more simpler ways for individual investors to get into markets that have been harder to crack,” Lilien said.
Euronext shareholders vote on the proposed deal on Thursday, with NYSE investors the following day. The deal still must win final regulatory approval in both the US and Europe.
The NYSE would not comment on specific ideas being mulled that could be offered to investors. However, in June, executives laid out a few natural products that would be derived from the combination.
For instance, NYSE Euronext will have 80 of the world’s top 100 companies by market valuation. This could quite easily be traded as part of an ETF, and even have derivatives and futures connected to it.
The NYSE also has been looking to expand into the futures market in the US as opposed to going head on against the Chicago Mercantile Exchange. Tapping into Euronext’s capabilities would enable it to offer futures products to US investors.
“The bottom line is all of these things, no matter how you cut it, benefits the individual investor,” Moglia said. “They may not be the reasons why the NYSE is doing the deal, but they are the byproducts.”