The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Exchanges: More strategic jostling in US equity

Brokers are looking to counterbalance the effects of exchange consolidation

The market is rife with speculation that Merrill Lynch and Citadel, a large US hedge fund, each plan to buy a 10% stake in the Philadelphia Stock Exchange.

The move is the second recent significant development in the US equity market since the New York Stock Exchange announced its merger with electronic rival Archipelago and Nasdaq its merger with I-Net, a leading ECN.

Shortly after those announcements, Knight Trading Group bought Attain, a small ECN, in a strategic move that competitors and industry analysts believe could help the broker exploit new market data revenue opportunities that arise out of the recently approved Reg NMS and give it a pivotal role in any backlash from the reduced competition among US exchanges.

Merrill's move could be aimed at something similar.

"As exchanges move toward new governance structures, there is the potential for bifurcation of interests between users and shareholders," says Samir Misra, a director at Mercer Oliver Wyman. "Users may fear a reduction in competition as a result of the recent consolidation. By buying a stake in an exchange, brokers get the chance to influence the future direction of exchange innovation and competition, while also positioning themselves to capture some upside from subsequent appreciation in value of the exchange."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree