Seeking Alpha
Research analyst, newsletter provider, Japanese micro & smaller caps, value
Profile| Send Message|
( followers)  
A AFX newswire reports that Taizo Nishimuro, president of the Tokyo Stock Exchange, said he prefers Euronext NV merge with the New York Stock Exchange Group (NYSE:NYX) instead of with Deutsche Boerse AG. The reason being, once the Tokyo Exchange goes public over the next two or three years then the three could pursue a three-way tie-up.

I am surprised by the openness of the Tokyo Exchange chief. There's no doubt he and everyone involved with exchanges in Asia and around the world have their eyes on the Euronext-NYSE deal and the consolidation trend among exchanges.

Per the newswire report, Nishimuro said his exchange cannot engage in merger activity at present since its shares are unlisted.

Normally cross-shareholdings are needed for such mergers. We need to be able to use our own shares. But we would likely still need two to three years until we have implemented a listing.

Although Nishimuro didn't count out the possibility of his exchange ever being a partner with the Deutsche Boerse, he did say that, "if one were to compare the two options, we have the impression that a cooperation with NYSE/Euronext would be more advantageous because it covers US markets."

That's a no-brainer, but the Tokyo Exchange will definitely need at least the next year and most likely the 2-3 years Nishimuro mentioned to get ready for a listing. I had heard that it planned to have an IPO this past March but there were too many problems along the road that ended the possibility.

Many readers will remember the "Livedoor shock" in which the Tokyo Exchange was forced to shutdown due to an overwhelming volume of sell orders. Only recently did it end its shortened trading time schedule since system upgrades now allow for better handling of larger trading volume. There have also been problems with erroneous trade orders being placed and executed despite cancellation requests.

Source: Tokyo Stock Exchange Favors Euronext-NYSE Deal (NYX)