LSE won't dance with the NASDAQ

The London Stock Exchange rejected the $5 Billion bid by the NASDAQ to buy it outright and create the across the pond alliance that NASDAQ wanted. CNNmoney.com reports it here.

Why is this important? Two reasons.

1. Twenty years after the "Big Bang" (London's massive financial markets deregulation), the LSE realizes that merging with the NASDAQ could result in Sarbannes-Oxley rearing its ugly head in Britain. This has led to London becoming the true financial capital of the world and New York coming second. Sarbannes-Oxley has made it more difficult, more tedious, and more expensive to list in the United States, and the competition is taking away business.

2. The big exchanges are feeling pressure to become more global and offer better trading opportunities. Unfortunately, banks and other large institutions are annoyed that the exchanges are dragging their feet to create the liquidity that is desperately needed due to undue beauracracy and jostling for position. Recently seven banks decided to come together to create the exchange and trade in the cross border shares. See the information below:

"The move comes as the world's stock markets are rushing to consolidate under pressure from customers to cut fees and offer global services. A group of banks added to the pressure last week by announcing plans to create their own pan-European equity trading platform next year." (CNNMoney.com)

The politicians and even the beauracratic exchanges don't get it. People are not looking for more regulation, they are looking for lower cost, technology driven trading platforms so that they can execute their trades and make more money.

The sooner that the regulators and exchanges understand that the barriers to entry and success are being eliminated, the sooner they will be able to react. The United States needs to follow the example of London's Big Bang twenty years ago and roll back Sarbannes-Oxley and make it easierer to raise money in the US. Unfortunately, with the Dems in office, and protectionism on the docket, this may be a pipe dream and have to wait two more years.

See Reuters article here.