Consolidation of Exchanges

December 6, 2023

Stock Exchanges in the classic sense hardly exist anymore. They evolved into ‘securities’ exchanges.
The NYSE is no exception. It is now only one line of business within the Intercontinental Exchange, which acquired it in 2013. Within the Exchanges Segment of ICE, cash equities and listings account for only 22% of revenues. And even that figure includes equity options, which were not part of the traditional business. The rest of ICE’s revenues are from futures, options and other derivatives, and data services.

That kind of acquisition activity was endemic to the industry. The exchanges only began coming public in the 2002 to 2010 period, but almost immediately began to consolidate, because the pure financial economics of combining two sets of trading volumes onto one computer platform is so highly accretive to profit margins. The short-term benefit is that one whole set of technology and personnel costs may be dispensed with. Plus, there is important strategic value in having a diversified set of asset classes trading under one roof.

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