Although the potential alliance between the Toronto Stock Exchange (TSX) and the New York Mercantile Exchange (Nymex) remains officially unconfirmed at press time, the industry is buzzing about its possible implications. Nymex reportedly will offer TSX 10 percent of its equity in exchange for control of Calgary's Natural Gas Exchange.
The deal could be a boon for traders if, as reported, the exchanges jointly offer stock, futures and commodities trading.
Jackie Chung, president of Competitive Metrics, a Toronto-based consultancy, says the exchanges' products – a wide array of mining and energy securities – are complementary. The combination of the two venues, Chung points out, would benefit traders and other investors looking to hedge their positions, conduct arbitrage, and/or buy securities and futures contracts on a single exchange.
Noting that "The TSX is an electronic model while the Nymex still relies on floor operations," Chung says there is an opportunity to reinvent Nymex as an electronic exchange, a move that would benefit the exchanges and investors, as an electronic venue would make trading faster and cheaper. This "would be particularly attractive to the buy side, which is always looking to reduce its share costs," she stresses. But, Chung warns, the investment required to go electronic could be significant, and there is a question as to what would happen to Nymex's floor brokers. >>The complete article is available at Wall Street & Technology |
