Essay - Global Competition of Stock Exchange as the World Economy Becomes...

Global Competition of Stock Exchange

As the world economy becomes increasingly integrated, the world's major stock exchanges have come into competition with one another. In past, each nation had its own exchange and the only genuine competition was between different exchanges within ***** same country (i.e. NYSE and NASDAQ). However, with as international barr*****rs between capital markets come down, ***** interlisting of multinational companies ***** more common, stock exchanges find themselves competing for listings. Some of the leading competitors are in New York, London, Tokyo, Hong Kong and Dubai.

***** exchanges compete on several factors. The first is the structure ***** the exchange *****elf. ***** ***** of exchanges is highly complex ***** subject to a wide range of variables, from legislation to technology. In major market *****, ***** differences ***** often subtle, and the end results will be relatively the same, but certainly structural features can make a difference.

One recent example is the imposition of ***** Sarbanes-Oxley Act in the US *****. This act makes ***** requirements ***** companies listed ***** the United States that ***** added to the costs ********** with a ***** listing. M*****ny foreign companies ***** are dually-listed in *****ir home country and in the US have found Sarbanes-Oxley onerous and no doubt there have ********** firms who have reconsidered ***** on a ***** exchange as a result. Sox is just ********** aspect of the US regulatory system, which features several ***** governing bodies; London on the other hand has a simple ***** with just *****e governing body.

Local expert*****e is ***** way in which exchanges ***** ***** one a*****ther. ***** is tied to the degree ***** liquidity they offer and the ability of a given exchange to raise ***** for certain types ***** companies. While the Internet ***** reduced the differences in expertise amongst investors to a point, some ***** retain specialties in ***** areas. NASDAQ, for example, is still considered to be a place ***** high-tech companies to raise capital. The Toronto Stock Exchange has long attracted issuers in the mining industry *****cause the level of investor knowledge of this sector has traditionally been higher in Canada. Thus, ***** TSX has a competitive advantage ***** attracting new mining issues since those types of companies find it easier to raise capital ***** than on most other exchanges.

Another major point of competition is the investment banking sector. Firms often choose their exchange based on their ability to ra*****e *****. This requires a strong ***** banking sec*****r, and a market in which a broad range of institutional ***** participates. This increases the pool ***** available capital as well as overall ***** liquidity. For example, London Stock ***** Chairman Chris Gibson-Smith outlined ***** need for European ***** markets to integrate in order that their ***** ***** capital-raising ability match that of the US.

Each of the ***** ***** capital markets has recognized the paradigm shift from national-***** markets ***** global capital markets that stems from free movement ***** global cash flows. The world's major ***** are actively