Wall Streeters Make Predictions About Exchange Mergers

With exchange consolidation in full swing, there is no shortage of predictions on The Street for more activity.

Main article:Exchange Consolidation Wave Is Expected to Continue in 2008

With exchange consolidation in full swing, there is no shortage of predictions on The Street for more activity. These are some of the predictions made by various industry traders and analysts. They say any or all of the following could happen in 2008:

Regional stock exchanges will sell out. NYSE Euronext will bid for the Chicago Stock Exchange, Philadelphia or the National Stock Exchange. That may happen in the next six months.
Though an underdog, BATS Trading could emerge as the third largest exchange in the U.S.
The ISE Stock Exchange will survive. It does about 50 million to 100 million shares a day, whereas the regionals do less than half that.
More alternative venues will pop up in Asia, where spreads are still wide.
Sources are bullish about Chi-X, an alternative trading system for Pan European stocks started by Instinet, which had a good track record with INET.
The CME will buy an equity exchange.
NYSE could buy the CBOE.
Goldman Sachs could buy the Chicago Stock Exchange.
BATS is going to see how difficult it is to get an exchange license and probably will look to acquire one of the regional exchanges.
The Amex will survive because it has unique listings.
The NYSE will buy the Amex and give it space on its trading floor.
The Deutsche Borse and NYSE Euronext will team up with someone in Asia, either Tokyo or Hong Kong.
The Deutsche Borse and NYSE Euronext will survive, and everyone else with dominant liquidity is going to get bought.
They NYSE will go to the dark side by setting up some type of block-trading facility or at least setting up a couple of order types in Hybrid to get blocks executed again. If it can't, it will move to recapture the order flow it's losing to crossing networks through an acquisition of, for example, Liquidnet.
NYSE Euronext and Nasdaq will get stronger.
In 2008 or 2009, Nasdaq and NYSE Euronext will think about merging.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio