This is going to be a fun year for Europe’s stock exchanges. It could even be make or break time for a few. Companies and investors alike have become fed up with tired old monopolies bashing a territorial drum.
And rightly so. After all, no company in a decent competitive environment would have been able to get away with the sort of behavior we have seen from some of Europe’s main stock exchanges in recent times. They would have been taken over or booted out of the market long ago by more nimble competitors.
In some cases, the vision has been there but it has been stymied by an inability to agree. The much vaunted pan-European trading platform, initiated by London and Frankfurt, has all but collapsed due to national self-interest. Now we hear that the Deutsche Borse, frustrated by its partners’ failure to adopt the German trading platform, is intending to demutualize and go it alone with its own plans to tempt Europe’s blue chips onto one system.
But it’s not just the petty arguments between the national exchanges that have maddened those having to deal with them. Several of the exchanges are so riddled with the idea that they have a divine right to exist that they have been slow to update crucial systems or provide a decent level of customer service.
Case in point: the London Stock Exchange is being lobbied by the UK’s Investor Relations Society in a bid to update the antiquated method of sending announcements through to the Regulatory News Service. It’s a ridiculously cumbersome system and the IRS is absolutely right to push for change from the LSE – any other business would have responded to customer needs long ago.
Luckily, there is some light at the end of the tunnel. The regulatory environment is changing, not just in Europe but also in the US. And the national self-interest argument is becoming less acceptable to a fast-moving, international market. Vodafone and Mannesmann is just the tip of the iceberg in that regard and exchanges will have to adapt too.
Beyond that is the welcome arrival of several new players. Electronic rivals to the traditional exchanges could well have a bumper year ahead. And Nasdaq’s plans for a decent European foothold are yet to be made completely clear. One thing you can be sure of: investors and companies will not stand for the current situation for much longer. Roll on the new millennium.
