TSE gets several suitors

Futures, Mar 2007 by Zwick, Steve

ONE BIG HAPPY FAMILY?

In late January, the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE) announced they would be working together on trading technology, product development, cross-marketing and regulatory cooperation as both exchanges continue to expand internationally.

Such announcements normally don't get much attention, but this one did. The NYSE had similar agreements with Euronext and the National Stock Exchange of India (NSE), both of which have led to ownership stakes (NYSE owns 5% of NSE, and are in the process of merging with Euronext). So, when NYSE boss John Thain said he'd like to see the exchanges swap shares in each other once the TSE goes public in 2009, people took notice.

But that's a long way off. For now the deal between TSE and NYSE represents little more than a memorandum of understanding, like scores in existence throughout the industry. As if to underline that point, TSE President Taizo Nishimuro zipped off to Chicago to meet with Chicago Mercantile Exchange (CME) officials after the New York deal was announced. A TSE spokesperson said the exchange wants to list Japanese government bond products on the CME's Globex platform.

Meanwhile, the NYSE's cross-town rival, Nasdaq, says it will hold onto its 29% stake in the London Stock Exchange (LSE) and maybe take another run at getting a controlling interest in 2008, after a 12-month cooling-off period mandated under U.K. law for hostile takeovers. The LSE turned down Nasdaq's bid of £12.43 ($24.39) per share, but Nasdaq boss Robert Greifeld says the exchange could lose market share once the E.U.'s Markets in Financial Instruments Directive comes into effect in November, opening exchanges to more competing platforms.

Greifeld has offered to license the use of Nasdaq's INet trade-matching engine to Project Turquoise, one of the new competing platforms set to launch in November, but the terms of the offer have not been made public.

By Steve Zwick