Big fish 大鱼


Twenty years ago the world’s elite exchanges were clubby and obscure. Now their tentacles spread far and wide



THE HONG KONG Stock Exchange (HKEX) resembles a financial estuary, says Charles Li, its boss. China’s capital flows mix with the open seas of global markets. In 2014 HKEX sought to ride the waves by launching Stock Connect, a conduit allowing offshore and mainland punters to invest in each other’s markets. Later it eased its listing rules for firms with dual share classes. All that has helped make HKEX more hospitable to the tech firms that exchanges covet. It has just landed another big catch. On August 25th Ant Group, the fintech affiliate of Alibaba, a Chinese e-commerce giant, filed for a listing that may raise $30bn in Hong Kong and Shanghai. That would make it the largest initial public offering ever.
The news made a splash. But it is easy to forget that, in the two decades or so since they themselves listed, HKEX and other exchanges have become big fish too, by exploiting the benefits of network effects, data and scale that Big Tech is best known for. The London Stock Exchange, which was worth less than $2bn when it went public in 2001, now has a market capitalisation of $41bn. The New York Stock Exchange (NYSE) is now part of Intercontinental Exchange (ICE) which is worth $57bn (see chart 1). HKEX’s market capitalisation has grown nearly sixty-fold, to $61bn. Their revenues similarly boomed.
Once crusty monopolies, exchanges have continually stretched their business models. They still run the match-making infrastructure that allows billions of shares and trillions of dollars to change hands daily. Stacey Cunningham, who helms NYSE, says it received over 300bn messages across its systems on peak days this spring; that is more than 50 times the number of daily Google searches. But after two decades of epic bidding wars and political drama, exchanges are also remarkably powerful financial conglomerates, controlling everything from the software powering banks’ back offices to the data pored over by investors. The race for dominance means that, today, a small group of elite exchanges are far ahead of the rest.
交易所曾是顽固封闭的垄断企业,把自己的商业模式不断用到极致。它们现在仍然经营着撮合交易的基础设施,每天易手的股票数量以十亿计,成交额以万亿美元计。纽交所的掌门人斯泰西•坎宁安(Stacey Cunningham)表示,今年春季高峰时段旗下系统每天收到3000多亿条报文。这是谷歌日搜索量的50倍还多。但是,在经历了20年的收购大战和政治大戏之后,交易所如今也是非常强大的金融企业集团,掌控着从银行后台软件到被投资者反复钻研的数据等方方面面。一场争夺统治地位的赛跑已经让一小批顶尖交易所遥遥领先。
Stock exchanges used to be owned by their members, which were mostly banks and brokers. When the biggest went public in the 2000s, they earned their crust by charging fees on equity issuance and transactions. The exchanges sought to diversify by expanding abroad and becoming trading venues for other assets, like derivatives and currencies. Most moved into clearing and settlement facilities, too.
For much of that period, “eat or be eaten” was the industry’s motto. In 2007 NYSE bought Euronext, a group that included the Amsterdam and Paris exchanges. ICE bought NYSE in 2013 (and spun out Euronext). Yet the strategy soon came up against antitrust and political vetoes. Attempts to marry Toronto’s stock exchange with LSE, LSE with Deutsche Börse, Deutsche Börse with NYSE, have all collapsed. Most recently, in 2019, an opportunistic bid by HKEX for the LSE fell through.
在那个时期的大部分时间里,“弱肉强食”是这个行业的座右铭。2007年,纽交所收购了包括阿姆斯特丹交易所和巴黎交易所的泛欧交易所(Euronext)。洲际交易所于2013年收购了纽交所(并分拆了泛欧交易所)。但这种策略很快遭到反垄断和政治上的否决。多伦多证交所与伦交所、伦交所与德意志证交所(Deutsche Börse,简称“德交所”)、德交所与纽交所的合并尝试均告失败。最近一次失败的是2019年港交所对伦交所的投机性收购要约。
With deals proving tricky the firms have found crafty ways to expand. As passive funds came to prominence, trading venues set their sights on benchmarks tracked by these funds. In 2010 Chicago Mercantile Exchange (CME), a big derivatives market, acquired Dow Jones, which assembles many of America’s most widely followed indices. LSE has a number of benchmarks that cover both sides of the Atlantic. (Updates to such indices—like the ejection of ExxonMobil, an oil firm, from Dow’s flagship index on August 25th—can cause mountains of money to shift).
Now the elite exchanges have turned their attention to data. On August 6th ICE said it had agreed to pay $11bn for Ellie Mae, which tracks the mortgage industry. LSE is awaiting approval of its $27bn bid for Refinitiv, a market-data firm. The hunt, says David Schwimmer, LSE’s boss, is only beginning. Whereas trading volumes are cyclical, indices and data are typically sold via more stable subscriptions. Oliver Wyman, a consultancy, expects trading revenues to stagnate or even decline, but those from crunching data to grow by over 5% annually in coming years.
如今,顶尖交易所又将目光投向了数据。8月6日,洲际交易所表示已同意以110亿美元收购跟踪抵押贷款行业的Ellie Mae。伦交所出价270亿美元收购市场数据公司路孚特(Refinitiv),目前正等待批准。伦交所老板大卫•史威默(David Schwimmer)表示,竞购大战才刚刚打响。证券交易量会周期性涨跌,但指数和数据通常都是通过更稳定的订阅服务销售的。奥纬咨询(Oliver Wyman)预计,未来几年交易收入将停滞不前甚至下降,但来自数据分析的收入每年将增长5%以上。
Twenty years ago the fear was that new entrants would eventually topple the exchanges’ de facto monopolies. But the incumbents have kept the challengers at bay. Customer complaints about their fat fees once enticed startups, such as IEX, an exchange that pledges fairer pricing. The rise of “dark pools”—venues that match buyers and sellers anonymously—also posed a threat. But seven years since it was founded, IEX’s market share is stuck at 1.8%. The share of trading volume accounted for by dark pools in America has stabilised at 12%.
The result is a pyramidal hierarchy, a good gauge of which is an exchange’s revenues. At the base are the minnows, in poor countries or small developed ones, which lack liquidity or scale and are struggling to diversify. Some should merge or close, but governments will keep them alive. “Every nation wants to have a strong airline, a good beer and a stock exchange,” says Nick O’Donnell of Baker McKenzie, a law firm.
结果就形成了一个金字塔型的层级结构,从交易所的收入水平就能清楚显示其所处位置。位于底部的是贫穷国家或小型发达国家的小鱼小虾,它们缺乏流动性,也不成规模,正在艰难地追求多元化。有些应该合并或关闭,但政府还是会让它们生存下去。“每个国家都想拥有一家航空巨头、一款好啤酒和一个股票交易所。”贝克麦坚时律师事务所(Baker McKenzie)的尼克•奥唐纳(Nick O’Donnell)说。
The next tier consists of exchanges with regional heft, and revenues exceeding $500m. Their reliance on trading in an era of tensions between America and China means they must team up or play to their strengths as neutral turf in order to thrive. On August 20th Singapore Exchange said it would work with LSE’s benchmark business to develop index derivatives focused on Asian and emerging markets. Euronext has acquired Nord Pool, a power market.
往上一层是具有区域影响力的交易所,收入超过五亿美元。它们对交易的高度依赖意味着,在中美关系紧张的时代,它们必须联合起来或者发挥自己作为中立地的优势才能蓬勃发展。8月20日,新加坡交易所宣布将与伦交所的基准指数业务合作,开发专注于亚洲和新兴市场的指数衍生品。泛欧交易所也收购了电力市场北欧电交所(Nord Pool)。
At the top of the food chain, with revenues at or exceeding $3bn, sit the giants: CME, Deutsche Börse, ICE and LSE. These have assured demand for big volumes, and will continue to reap the rewards of diversification. Two candidates are on the verge of promotion into the top league. Nasdaq, once famous only for its tech listings, now makes software that powers more than 130 other exchanges. HKEX enjoys the strongest tailwinds. It stands to win from China’s capital-market liberalisation, its growing tech nous and mainland firms’ desire to be closer to their home market. Geopolitics could also help, as Ant’s decision not to list in America may already show.
In time, Mr Li reckons, “almost all” Chinese companies listed in America will come back to Asia. Stock Connect, which makes up 7-8% of daily trading on HKEX, could end up accounting for a quarter of it. Being at the confluence of China’s rivers of capital and the sea of global funds should be a lucrative business.