NYSE in favor of rival London exchange: Report

NYSE in favor of rival London exchange: Report

	Published : Mon, 19 Jun 2006 12:15 By : Richard Owen Print this Story

LONDON - NYSE Group Inc., which acquired the pan-European exchange Euronext for around 7.9 billion euros ($10 billion), would consider "creating a rival London exchange to compete with the London Stock Exchange," according to a report in The Financial Times.

This idea was mooted by NYSE Chief Executive John Thain in a wide-ranging interview to the paper. "The combination of exchanges really is that there are several drivers. First, to the extent that you can consolidate pools of liquidity, that is a plus. Also, you can offer a broader range of products and a broader range of trading hours. That is a plus," he said.

However the deal could be scuppered if French President Jacques Chirac has his way. He seems to favor the acquisition by German exchange Deutsche Börse. “I favour the Franco-German solution for reasons of principle, and I would regret it if this solution were not to be adopted,” he said. The Sunday Times said that Angela Merkel, the German chancellor, Italy’s prime minister Romano Prodi and Jean-Claude Trichet, president of the European Central Bank are all in agreement with Chirac.

In recent days, Mr Thain has been forced to go on the defensive and he has responded by giving interviews to papers extolling the merits of the merger. His ace appears to be the liquidity pool having a $100 billion daily turnover. But even that has come under a cloud. "The consolidation of the NYSE and Euronext will not directly either increase or reduce liquidity," Larry Tabb, chairman of the Tabb Group wrote in a recent newsletter. "Liquidity is like the chicken and the egg."

Mr Thain acknowledged in the interview that it would be tough. "It will be a little bit of a challenge because the fungibility of shares between the US and Europe isn't so easy," he said, adding that there would be cost synergies if the deal went through.