The US and European national stock exchanges are now firmly in the acceptance stage of psychiatrist Kübler-Ross’s five phases of grief. After a period of complacency, cries of double standards and attempts to bargain with regulators, they are now coming to terms with the increasingly competitive landscape in which they operate. And they have finally taken meaningful action.
As their home market shares eroded, the incumbent bourses looked to drive down costs by buying cheaper technology and slashing staff numbers, but even the most ruthless could only cut so far. After that, the most obvious route to increased efficiency is to capitalise on economies of scale by playing to one of the exchange groups' key strengths – sheer size – and becoming even larger. Enter the recent contagious outbreak of M&A activity amongst some of the world's biggest exchange names.
