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The Warsaw Voice » Business » February 25, 2011
Business & Economy
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Stock Exchange Giants in Merger Talks
February 25, 2011   
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The planned merger of the stock exchanges in New York and Frankfurt is unlikely to affect the work of the Warsaw Stock Exchange—at least not in the near future. The NYSE Euronext company, which operates the New York Stock Exchange, announced in February that it was in merger talks with the Deutsche Börse company, the operator of the German stock exchange in Frankfurt. Deutsche Börse said it expected to acquire 60 percent of the stock in the new corporation.

According to U.S. media reports, the merger is a sign of the New York Stock Exchange’s diminishing importance on the one hand and intensifying globalization on financial markets on the other.

The New York Times said that the planned merger, “after the mergers of other exchanges, would be another illustration of how globalization and technology have changed marketplaces. The New York Stock Exchange is a giant among exchanges, yet in a world of around-the-clock trading and rapid-fire algorithmic programs, its significance to investors has diminished.”

Whether the Warsaw Stock Exchange can benefit from the transaction in any way depends, according to experts, on the trading system which the new transatlantic operator adopts after the two giants merge. Deutsche Börse uses the Xetra trading platform, whereas NYSE Euronext has been launching the Universal Trading Platform (UTP) on its exchanges. In July last year, the Warsaw Stock Exchange signed a framework agreement with NYSE Euronext under which the new UTP transaction system would be launched in Warsaw in 2012.

Experts say that, aside from the new technology, the merger would not have much impact on the Warsaw Stock Exchange. Miros³aw Kachniewski, vice-president of the Polish Association of Listed Companies, has told the Parkiet newspaper that while arguably the largest financial center in its region, the Warsaw Stock Exchange is a small marketplace on the global scene. According to Kachniewski, the planned merger of the Frankfurt and New York stock exchanges is unlikely to encourage Polish companies to enter these stock exchanges, because even the largest Polish companies would appear as small businesses there. “Besides, what matters most is not the competition between the stock exchanges, but that between stock exchanges and other trading systems,” Kachniewski said. “Such competition has an effect on listed companies, because when trading is concentrated in one place, the liquidity of trading improves and the share prices rise.”
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