NYSE Group and Tokyo Stock Exchange, parents of the world's two largest stock exchanges, agreed to cooperate in the field of trading technology, listings and new products in an accord sealed today at the New York Stock Exchange, where NYSE CEO John Thain and TSE CEO Taizo Nishimuro signed a letter of intent covering the non-exclusive accord. The areas of cooperation include: systems and technology, trading services, market data products, issuer and investor services, cross-marketing and listed company regulation and governance. The agreement was first reported late Tuesday on Pensions & Investments' website, www.pionline.com.
While the agreement might pave the way for a merger, this is a hypothetical and distant prospect. "The TSE is not publicly traded," said Mr. Nishimuro, who added his exchange may be listed "toward the end of 2009."
Being publicly traded creates the currency that exchanges need to finance mergers, such as the deal between NYSE and Euronext, which is expected to close this spring, or Chicago Mercantile Exchange Holdings and CBOT Holdings, the parent of the Chicago Board of Trade, expected to close in summer.
Mr. Thain said the alliance "may serve as a business model in the exchange industry." He expects the exchange sector to eventually be led by a few major players that will offer trading in multiple asset classes around the world.
Asked where the NYSE would look next, Mr. Thain said the one sector still lacking in his group is derivatives, the fastest-growing segment of trading.