Should Investors Benefit From Stock Exchange Mergers?

by: Roger Nusbaum
Alan Abelson had this observation about the proposed merger between NYSE/Euronext (NYSE:NYX) and Deutsche Boerse (OTCPK:DBOEY):

All of which suggests to us that whatever the likely virtues of the proposed German-American combo, the benefits to the individual investor do not loom prominent among them.

Slightly bigger picture: The publicly traded exchange group is a space I generally think highly of. Aside from being financial infrastructure, capital markets are evolving rapidly as a middle class ascends in countries where there has been no middle class, or I should say investor class. The exchange in Brazil recently listed shares; you already know that the exchanges from Peru, Colombia and Chile are merging; you may have forgotten that the exchange in Singapore (OTCPK:SPXCF) is trying to merge with the Australian Stock Exchange (OTCPK:ASXFF); at the same time as the news about NYX came, it looks like the exchange in Toronto (TMXGF.PK) will merge with the London Stock Exchange (OTCPK:LDNXF).
The exchanges play an essential role in their respective countries, but Abelson's comments are also very true. That the exchanges, large banks, brokerages and the like do not put the interest of individual investors high on their priority lists does not have to be so bad if you realize they do not necessarily have your interests in mind. These sorts of conflicts are beyond our control. I find little use in trying to swim up this stream. Realizing this deck is stacked against you, to mix metaphors, allows for proceeding with a better chance for success with your investment policy and financial plan.