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Stock Exchange InvestmentThe majority of this site discusses ways of purchasing shares or stocks in companies with a public listing. It is of course, also possible to invest in the company that owns the exchange itself. This has become a big game as the more aggressive companies, such as Nasdaq, look to purchase other bourses around the world to expand their empires. Though these purchases are fraught with problems, it has not stopped rivals from buying large stakes in each other to either offer the potential for a hostile or friendly purchase in the future and potentially to block other competitors from the same expansion. This is a topic that opens up many issues relating to finance. If a company, such as Nasdaq, is trying to make a cross border stock exchange investment, there are huge national economic and regulatory issues at stake. For example, we have said many times on this site, that a bourse is a vital part of a national economy. It really is! We were not joking. There can potentially be major financial consequences for a national economy when it's stock exchange is bought by a foreign corporation. With major exchanges, private equity firms and sovereign wealth funds all looking to make long term strategic purchases, one thing is clear - many exchanges will change hands in the future. What about regulations? Do the regulations of one country suddenly apply to corporations listed on the stock exchange of another country which just happens to be owned by another? The potential for having US anti money laundering rules, or Sarbanes-Oxley regulations would be quite unappealing for many companies if a US firm were to purchase other exchanges. The cost of compliance with regulations in a home country and then a second set of regulations from another nation would be damaging to many smaller listed firms. As you can see, this would be an unpopular and potentially very expensive part of any international stock exchange investment. |