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Dubai: The global consolidation of stock and derivatives exchanges is set to shift focus to the Middle East with NYSE Euronext acquiring a 25 per cent stake in the Doha Securities Market on Tuesday.
With the entry of NYSE Euronext in the region, the world's most prominent stock and derivatives exchanges such as the Nasdaq-OMX group, London Stock Exchange and New York Mercantile Exchange have strong presences in the region.
NYSE Euronext's acquisition of Doha market shares, valued at $250 million, is likely to accelerate the pace of regional stock exchange consolidation and integration with the global marketplace in which major exchanges such as NYSE Euronext and Nasdaq-OMX Group are likely to emerge as big players.
Strong presence
Qatar's deal with NYSE Euronext is expected to transform the Doha Securities Market (DSM) into a significant international player space and provide NYSE Euronext with a strong presence in the Middle East.
"Today's announcement represents the cornerstone of Qatar's vision to bring our entire economic infrastructure up to the highest international standards, thereby laying the best possible foundations for the development of this dynamic nation,'' Shaikh Hamad Bin Jassem Bin Jaber Al Thani, Qatar's Prime Minister and Minister of Foreign Affairs, said in an e-mailed statement.
Analysts and investment bankers said that the DSM deal is expected to counter the ambitious plans of Nasdaq OMX to consolidate their presence in the region through their association with Borse Dubai.
While Borse Dubai's representative said that the company did not want to comment on the new development, DSM sources told Gulf News that this new partnership will target the creation of a new cash and derivatives exchange in Doha that will tap into other regional markets.
"Although regional joint projects with NYSE Euro-next can't be ruled out, this association can't be in anyway interpreted as rivalry with any other exchange or exchanges," said the DSM source.
Fewer numbers
As the larger global exchanges are being snapped up in the approximately $100 billion exchange consolidation, there are fewer global exchanges to be acquired.
Earlier this year, Borse Dubai completed a complex deal with the Nasdaq OMX group, through which it acquired 19.9 per cent stake in the US exchange and as part of the deal the Nasdaq OMX group acquired a 33 per cent stake in the Dubai International Financial Exchange.
Last year saw major exchanges prowling the developed world to snap up acquisition targets to diversify revenues and reduce technology costs. Now the next wave of merger activity appears to be shifting to the emerging markets.
Big players in the fray
- New York Stock Exchange: Merged with Euronext, operator of five European markets, including Liffe, the London financial futures market, recently acquired the American Stock Exchange and acquired 25 per cent stake in DSM yesterday.
- Nasdaq: Entered into a deal with Borse Dubai to acquire OMX, the Scandinavian exchanges operator in exchange for 19.99 per cent stake. As part of the deal, Borse Dubai acquired a 28 per cent stake in the London Stock Exchange (later diluted to 22 per cent) and Nasdaq OMX acquired a 35 per cent stake in DIFX.
- London Stock Exchange: Last year, it merged with Borsa Italiana. Currently, Borse Dubai and Qatar Investment Authority hold 22 per cent and 15.5 per cent stakes respectively in the LSE.
- Nymex: Is in the process of merging with Chicago Mercantile Exchange (CME) - and Chicago Board of Trade combine. Nymex currently owns 33 per cent of the Dubai Mercantile Exchange.
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