By Thomas Atkins –
DAVOS, Switzerland (Reuters) – The New York Stock Exchange sees growth through U.S. and Asian expansion and with new products rather than entering the bidding battle for the London Stock Exchange, its chairman said on Thursday. “We would not be very interested in getting into any bidding competition for the LSE,” said John Thain, chairman and chief executive of the NYSE, at the World Economic Forum in Davos.
“I have plenty to do in the U.S. right now.”
Thain said the exchange’s Asian business was growing rapidly, with China and India representing the biggest opportunities, and with more opportunities as well in Russia, Brazil and Eastern Europe.
“There are less synergies between the U.S. and London than there are across Europe,” he told reporters. “The two big growth areas of the world are China and India.”
In October 2003 the NYSE signed a memorandum of understanding with the Shanghai Stock Exchange, but the Big Board will face competition from the LSE which has also been on the prowl for Indian and Chinese companies to have a secondary listing in London.
Thain said the United States would remain the focus of the exchange’s expansion for the coming year as it examines ways to expand its product line to include trading in options, futures, derivatives, convertible bonds and fixed income products, putting it head-to-head with Chicago’s derivatives exchanges.
“There are opportunities for us to trade related products,” Thain said. “The only way we’re going to grow faster than the cash market is to expand our product base.”
“Our focus for the next year will be much more on the U.S.,” he added.
The strategy echoes that of rival Nasdaq, which has also refocused on its core U.S. business to take on the Big Board directly. The NYSE will also have to come to terms with a major change anticipated in the way shares are traded in the United States.
Thain criticized what he said were attempts by European exchanges to lure foreign listings by offering more liberal, or less strict, regulatory regimes than those imposed by the U.S. Securities and Exchange Commission (SEC).
“The regulatory arbitrage that the European exchanges are marketing at the moment will not last very long,” Thain said. “I don’t think it’s good generally for global markets to have regulatory arbitrage.”
The SEC is exploring ways to ease burdens imposed by the U.S. Sarbanes-Oxley Act by extending reporting deadlines, and to facilitate the process by which companies leave the U.S. market by easing procedures used to deregister from SEC oversight.
Thain welcomed recent comments by SEC Chairman William Donaldson that softened the U.S. market regulator’s tone after companies have complained of the cost and difficulty of meeting Sarbanes-Oxley, and the problems foreign companies face in delisting.
At the same time, European regulators are likely to tighten some controls to follow the U.S. example, he said. “It is likely that the EU adopt rules that are much more similar to the U.S,” he said.
Thain said he saw opportunities in the huge flow of investments into private equity, as private equity funds — who buy assets or companies they see as undervalued and restructure them — tend to list their purchases within about three years.
“The IPOs, which have already picked up in 2004, will continue to pick up,” he said.
I have been watching some of the webcasts of the World Economic Forum and they have been very informative. I personally liked the brief webcast on “Does Business Have a Noble Value?”. I like the opening comments by Stephen Roach of Morgan Stanley. I didn’t really like what he had to say, as I agreed with his analysis of the United States, but that is reality – sometimes the truth hurts. Interesting also was the survey as to would today’s world leaders take responsibility for making tough choices on these issues. 43% said low confidence, 18% said very low confidence. 34% moderate confidence. 4% high confidence. 1% very confident.
Anyway, I encourage you guys to view the webcasts if you get a chance.
Thanks for the great suggestion, we’ll make sure to publish an article about Davos World Economic Forum, also note that there is a very interesting Blog associated with the Forum, located at http://www.forumblog.org/