Some Issues on Cross-border Stock Exchange Mergers

Globalization, internationalization, integration, deregulation, as well as technological advances have provided the impetus for mergers of stock exchanges to facilitate cross-border listings and trading. Cross-border mergers trigger a series of different issues to be analyzed. The focus of our analysis will be on regulatory and competition law issues arising from cross-border stock exchange mergers. From a competition law standpoint, stock exchange mergers may have a severe impact on the competition among stock exchanges and thus lead to higher fees or lower quality of service. The focus will be on horizontal issues arising from such mergers. Thus, this Article will provide an analysis of the following issues: (1) the provision of primary listing services to domestic companies; (2) the provision of secondary listing services and primary listing services to companies seeking listings outside their domestic market; (3) the provision of on-book equities trading services; (4) markets for bonds and derivatives trading; and (5) markets for information services as well as information technology services. Some permutations of cross-border stock exchange mergers may induce competitive harm that leads to a post-merger market characterized by a lower degree of competition, and thus a lower degree of innovation and improvement in exchange services. The burden falls on competition authorities to ensure that effective and sufficient competition remains after any consolidation in the stock exchange industry. It should be emphasized that sound and effective regulation is the key to the development and integration of stock exchanges in the global market. Effective regulation will provide confidence and attract investors, . Principal Case Officer at the Office of Fair Trading (UK), Visiting Lecturer at City University (UK), and Visiting Fellow at the University of Durham (UK). The author's email is [email protected]. The views expressed herein are only of the authors and in no way reflect the opinion of the Office of Fair Trading. Assistant Professor at the University of Warwick (UK). The author's email is [email protected]