NYSE, Tokyo exchanges in alliance http://in.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2007-01-31T224657Z_01_NOOTR_RTRJONC_0_India-285811-1.xml
Wed Jan 31, 2007
By Jonathan Keehner
NEW YORK (Reuters) - NYSE Group Inc., the top U.S. stock exchange, will form an alliance with the Tokyo Stock Exchange (TSE), Asia's biggest bourse, as it seeks to expand its global footprint, the NYSE said on Wednesday Under terms of the widely expected agreement, the two exchanges will establish working groups to focus on technology, promotional activities and listings.
Some analysts were underwhelmed, citing the lack of a capital exchange or concrete plans for developing a joint platform.
"What was basically said is: 'We agree that we might agree about something in the future,'" said Octavio Marenzi, CEO of Boston consultant Celent, calling the announcement "anticlimactic."
For a stake in TSE, Marenzi added, NYSE may have to wait until the Tokyo exchange's planned initial public offering in 2009.
"In terms of tangible benefits [for NYSE], there may be some around listings," said Keefe, Bruyette & Woods analyst Richard Herr. "But outside of that, I don't see a whole lot of benefit for trading operations." NYSE shares were up 1 cent at $100.76 in morning trading.
TECHNOLOGY AND EXPANSION
The Tokyo exchange stands to gain by sharing technology, analysts said, noting that a systems failure brought down the TSE for a day in 2005 and led to a widely publicized docking of executive pay.
Cooperation in this area could also help the NYSE's bottom line, which plans to merge with Paris-based Euronext, which was formed by the merger of the Paris, Brussels, and Amsterdam exchanges.
"Euronext is one of the leading providers of assistance and technology around the world to exchanges," said Celent's Marenzi. "So they have an arm whose expertise is precisely building and assisting systems for other exchanges."
And overseas ties could help the NYSE with shareholders as U.S. exchanges seek to diversify beyond crowded domestic markets.
The pact follows the Big Board's acquisition earlier this month of a stake in National Stock Exchange, the biggest stock exchange in India, and comes only weeks after its shareholders approved the $14 billion Euronext merger. NYSE Chief Executive John Thain has also indicated the Big Board may next look to China.
"NYSE gets to show shareholders they are continuing to build up their global franchise," said KBW's Herr. "Japan is another jewel in their crown, if you will. But whether this leads to a full-blown strategic combination is another issue entirely."
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