Wednesday, October 12, 2005

The Market of Tomorrow

It's interesting to consider what a fully-networked global equity market structure could look like.

To be sure, Sarbanes-Oxley ("SOX") has created a virtual obstacle course for companies interested in listing their shares in a US-based bourse. As they say, when life gives you Sarbanes-Oxley, make Sarbanes-Oxley juice!

Here's what I mean.

Once the NYX deal closes, and the world markets digest what this means for their future, more M&A is destined to take place. Ultimately, the NYX should be a leader in this consolidation and emerge as a multi-national organization. The New York Life Insurance Company has demonstrated that just because you have "New York" in your name, it doesn't mean that you can't have an overseas arm, as well. The New York Stock Exchange Group should not be contained to the US, and exploring international options can help jump-start growth.

If NYSE were public today, would it be considered a growth story? Probably not. How could it be? They get to be a growth story thanks to ArcaEx. The canoe is about to get an engine, and if NYX shareholders are the riders, buckle-up. . .here we grow! Think Langone or Higgins have any ideas for generating the type of growth that NYSE seatholders benefit from due to the AX deal? Doubtful. Ok, enough time spent talking about the crabby infidels. Back to the market of tomorrow.

There are numerous advantages that having an overseas arm can produce for NYX shareholders. Perhaps chief among them is that Sarbanes-Oxley doesn't apply overseas. When a multi-national co-lists on an exhange in the US and one in Europe, the rules of the land where the bourse is located apply.

Theoretically, a US-based company can list their shares on an international exchange and bypass the costly requirements that SOX creates. Where SOX is a barrier to entry for many US-based companies, offering an alternative on an exchange in another nation could be appealing.

Though I am not certain of the letter/spirit of the law in these matters, it is clear that growing overseas will provide a competitive advantage.

Reuters reports today about a study commissioned by the NYSE about co-listed companies and their valuations. The article states, "The findings coincide with a further push by the NYSE to attract foreign listings to the Exchange, with Chief Executive John Thain traveling to India and China in the week beginning October 17 to meet managers of prospective listed companies, regulatory officials and government leaders."

So the opportunity is two-fold. One: get companies located overseas to list on NYX. Two: get companies located in the US to list overseas. The opportunities are boundless, and once the NYX deal closes, it will be a lot of fun to watch as the global equity market structure changes.

NYX is the best positioned company and will be considered the Rolls Royce of bourses throughout the world.


Post a Comment

<< Home

Free Web Counters