The FTSE Mondo Visione Exchanges Index finished with a strong rally to end 2008, reflecting merger and acquisition activity in the sector. On 8th December, merger talks between Deutsche Borse and NYSE produced a 23 per cent rise in NYSE’s share price, with the overall Index rising 14 per cent on that day.
The FTSE Mondo Visione Exchanges Index, which aims to reflect market sentiment and is the key indicator of exchanges performance rose 6.7 per cent in December 2008 but lost 67.2 per cent of its overall value during the period January 1 to 31 December.
Herbie Skeete, Managing Director, Mondo Visione and also Co-founder of the Index said:
“2008 has shown that exchanges are no longer seen as a one-way bet as investors are becoming more discerning.
The exchanges landscape is in a state of flux. In Europe declining volumes are creating a harsh environment for MTFs whilst for exchanges; a fragmented data landscape coupled with declining IPOs will impact revenue in 2009. Asia-Pacific is also entering a new phase with exchanges either being challenged or about to be challenged by new entrants and the impact of DMA and algo-trading. In North America, as in Europe, new entrants with innovative matching systems, low latency, aggressive pricing and a low cost base are setting a formidable challenge for the established players.
It is no longer business as usual for exchanges. The ones that succeed will be those with diversified business models. Exchanges that stick with trading a single asset class will face an uncertain future.”
Commenting in the January 2009 edition of Trading Places, Benn Steil, Senior Fellow and Director, Council on Foreign Relations New York said:
“The exchange gold rush is officially over. The market for marketplaces has been brought back to earth by de-leveraging and we may never again see the cost of debt capital for financial institutions, which underpinned soaring exchange trading volumes, as low as it was from 2002 to 2007.”
The Index closed at 15782.62 on 31 December 2008, down from 14786.33 on 28 November 2008.
Year to date, the FTSE Mondo Visione Exchanges Index best performer by capital returns in US dollars was NASDAQ OMX Group, Inc. with a 50.1 per cent decrease in share price from January 1 to 31 December 2008.
Year to date, the FTSE Mondo Visione Exchanges Index worst performer by capital returns in US dollars was the BM&F Bovespa SA with an 81.6 per cent decrease in share price from January 1 to 31 December 2008.
On 22 December 2008, the Philippine Stock Exchange entered the FTSE Mondo Visione Exchanges Index bringing the total number of exchanges listed on the Index to 18.
*In 2008, the FTSE Mondo Visione Index saw volatile movements with all exchanges losing value in their share price. However, it still outperformed the all-World Index.
