End-users of exchange-traded derivatives don’t care where the instrument is traded, or which exchange is linked with which. What they want is liquidity.
Apparently ignoring this point, almost every exchange with global pretensions has been trying to form trading links across time zones with other exchanges. It’s an expensive exercise and the benefits are questionable. Will these mostly unhappy liaisons continue, or will exchanges recognize that they must either merge or slug it out until only a handful are left standing? Perhaps what they should be concentrating on is mechanisms that improve clearing and margining across exchanges, which could benefit everyone.
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