Speculation is mounting that Nasdaq OMX could move to hijack Deutsche Bourse's bid for Nyse Euronext as exchange operators scramble for tie-ups in what LSE chief Xavier Rolet predicts is just the start of a round of consolidation that could leave as few as three super groups standing in five years.
Quoting a single anonymous source, Reuters reports that Nasdaq OMX is contemplating its options, with a rival bid for Nyse chief among them, as it strives to avoid being left on the sidelines. Other options include tie-ups with IntercontinentalExchange or CME Group.
Meanwhile, the Wall Street Journal speculates that Nasdaq OMX could sit tight in the hope of an agreement with the Singapore Exchange. The latter is currently trying to complete the acquisition of Australia's ASX but faces some regulatory opposition. SGX is led by former Nasdaq OMX executive Magnus Böcker and also runs on a Nasdaq technology platform.
With Bats inking a deal to buy Chi-X Europe last week and the LSE agreeing its own merger with Canada's TMX Group, Rolet is predicting a wave of consolidation, following a quiet period in the wake of the 2008 financial crisis.
"In five years there'll be three, four international exchange groups with global distribution capabilities," he told Reuters. "The start of the second generation of consolidation in the exchange world is just that...We're just getting started, guys."
However, regulatory concerns could still stymie some takeovers, with Canadian law makers expected to run a close eye over the LSE-TMX deal. Rolet told Reuters he expects "some tense moments" forcing the deal through while his TMX counterpart Thomas Kloet says he takes political opposition "very seriously".
With TMX stock currently underperforming the LSE bid price, traders are downplaying the expectations of a successful deal. In a report on the matter, agency broker Instinet reflects the prevailing mood: "We do not believe that the proposed merger, as currently constituted, will make it through the Canadian regulatory process".
Nasdaq mulls NYSE bid in exchange deal dash - Reuters