While merger/acquisition proposals emanate from the private interests of the owners/managers of stock exchanges (and are increasingly likely given modern technological developments relevant to exchanges), there are also potential social benefits in the form of reduced transactions costs, increased liquidity etc.
Some recent cross-border consolidation proposals from stock exchanges have met opposition on “national interest” grounds. These are often ill-defined and it is important to be clear what they are.
To the extent that mergers have adverse implications for the level of competition in provision of exchange services, barriers to entry for new stock exchanges (either regulatory or created by incumbents) warrant examination.
Consolidation of exchanges raises a number of important financial stability issues which require up-front agreement between national regulators on crisis management and resolution mechanisms.
The ANZSFRC meets approximately twice every year in one of the major cities in Australia and New Zealand. The ‘shadow’ function of the Committee is related to its purpose of following and analysing critically the existing and evolving regulatory framework for financial institutions and markets. The Committee is fully independent of the providers, regulators and supervisors of financial services whose behaviour it aims to evaluate.
This Statement was produced jointly with the Asian Shadow Financial Regulatory Committee.
For more information on the ANZSFRC click here