Trading in shares of NYSE Euronext and Deutsche Boerse AG was halted after Bernecker Boersenbrief, an investor newsletter in Germany, said merger talks between the companies are “apparently” at an advanced stage, without saying where it got the information.
NYSE shares rose 5.3 percent, the most since April, to $35.18 as of 10:24 a.m. in New York before the suspension. Deutsche Boerse climbed 1.7 percent to 58.44 euros, the highest price since January 2010. Their combined market value of $24.8 billion exceeds Hong Kong Exchanges & Clearing Ltd., currently the world’s largest exchange operator by market capitalization.
The Bloomberg World Exchange Index of 23 companies rallied 1.5 percent at 10:58 a.m. in New York.
London Stock Exchange Group Plc, the 210-year-old bourse operator, said today that it agreed to buy Toronto Stock Exchange owner TMX Group Inc. for about C$3.2 billion ($3.2 billion) in stock as the companies cut costs to counter lost market share.
LSE handled 63.8 percent of U.K. equity trading last quarter, compared with about 75 percent in 2009, data from the London-based company show. The Toronto Stock Exchange had 64 percent in December, down from 95 percent two years earlier, according to data compiled by the Investment Industry Regulatory Organization of Canada.
The merger is an attempt to maintain profitability and expand in derivatives as the companies’ loss of business in trading worsens, said Diego Perfumo, an analyst at Equity Research Desk in Greenwich, Connecticut, who advises hedge funds. In the U.S., where the New York Stock Exchange and Nasdaq Stock Market controlled 80 percent of volume a decade ago, no firm accounts for more than 27 percent, Barclays Plc data show.
“Competition in equity trading is intensifying, so exchanges need to be able to trade more cheaply and at faster speed against alternative trading venues,” Perfumo said. “The LSE and TMX need to become the low-cost provider with the fastest execution platform to compete effectively and hence try to reverse or slow this market-share trend.”
Operating profit may rise 13 percent through expense reductions at the merged company, Macquarie Group Ltd. said in a report sent to clients yesterday.
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