Globalization: The birth of the frankenstein monster
Should we be worried? The New York Stock Exchange (NYSE) and EuroNext agreed to merge. This will create the first ever true International equity marketplace. The new company will be called NYSE Euronext and will have trading floors on both continents. Euronet shareholder will lose out, just slightly but it is roughly a par:par deal. In exchange they get roughly equivalent shares in the new company. However, this creates a few regulatory problems.
- Does the EU really want the US SEC creating regulatory havoc in the EU. There are huge jurisdictional issues here since the new company will be a US holding (probably Delaware) and subject to the SEC, who have been getting very aggressive lately.
- The EU has it's own regulators who are extremely territorial. They can, conversely, start regulating the trade of US companies.
- This could be the start of a US v EU regulatorial pissing contest and these regulators have to figure out how to work together, or not, as the case may be.
- Both regulators can simply opt-out and quash the merger.
- The included companies can now play both regulators against each other and wind up with no effective regulation at all. This moves us one step closer to rule-by-oligarchy, with corporations having more power than many governments. I am not quite comfortable with that.
- This blurs the lines between US and EU trading. Some say that is a good thing, I am less sure.
- It is almost certain that this will trigger a round of financial markets consolidation. The bottom-line there is fewer chices. This is almost never a good thing for citizens. Reduction of choice through aggregation is almost never good for the individual citizen. Basically, it's the road to monopoly and all the evils entailed in that.