Innovation and Change: NYSE merger with German Deutsche Boerse

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NYSE might be renamed as the German Deutshe Boerse shareholders control 60% of the combined entity.While  everyone will nostalgically miss the “NYSE” acronym on print,TV,News and the Internet , the combined entity has interesting plans.

The combined entity will be able to offer greater value in their value chain of pre-trade,trade and  post-trade apart from a huge presence in USA and Europe. They hope to re-invent the stock exchange industry and category.

Words like “value  chain” remind you of the auto industry,while the word “category” is used in the FMCG space and tackling the US and European market could be for almost anything. Also I wonder if people really think of the “stock exchange” as a global “industry” in the first place !

But that is innovation and change as equity trading becomes less profitable for the exchange industry. Plans include growing the volume in complex and more novel products like derivatives and futures in place of the simple equity share. The latter is perceived warily by the small investor, at least after the melt-down, and most of the volume comes from day traders where the stock exchange makes less and less money as technology becomes easier and cheaper. The NYSE -Deutsche Boerse entity hopes to grow their revenues on new products and obviously expects that traders and eventually small investers will participate in trading of derivatives,futures and other new products.