Stock Exchanges
Companies in this industry operate physical or electronic marketplaces to facilitate the buying and selling of stocks, stock options, bonds, or commodity contracts. Major companies include the Cboe Global Markets, Nasdaq OMX, and New York Stock Exchange (all based in the US), as well as Japan Exchange Group, Euronext (Netherlands), and London Stock Exchange. Regardless of their location, major securities exchanges are global in scope.
The global equity market capitalization, which represents the value of publicly traded companies and indicates demand for stock exchanges, reached about $106 trillion as of 2023, according to SIFMA. The US dominates the market at $49 trillion, representing over 40%. China, the European Union, and other emerging and developed markets follow at about 10% each.
The securities and commodity exchanges industry in the US includes about 40 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $12 billion.
Competitive Landscape
Demand is driven by investor confidence and companies seeking access to public capital. The profitability of individual exchanges depends on maximizing transaction and clearing fees while keeping transaction-based expenses low. Large companies have advantages in volume of shares traded, their ability to attract large company listings, and access to public capital in foreign markets. Smaller exchanges can compete effectively by specializing in smaller companies, sectors, such as technology stocks, regions, or specialty financial instruments. Most companies ultimately chose to list on their domestic stock exchanges. The industry in the US is highly concentrated: the four largest firms account for almost all of the total revenue.
Competition among exchanges is based on providing market participants with greater functionality, trading system stability, customer service, efficient pricing, and speed of execution. Exchanges compete aggressively for new listings, including those undergoing IPOs and companies looking to switch from other exchanges. Competition for IPOs is global, with the US, Hong Kong, and London the favored destinations for cross-border IPOs.
Electronic trading and the emergence of alternative trading platforms have set off a global wave of consolidation throughout the exchange industry, as companies seek cost synergies amid increasing downward pressure on fees. The London Stock Exchange became the target of a takeover by its German competitor Deutsche Borse in 2016, but the deal was struck down by European regulators following Britain's vote to leave the European Union.
Products, Operations & Technology
Major services are support services for financial and commodity markets, accounting for about 60% of revenue; followed by trade execution, clearing, and
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Regional & International Issues
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Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms