Stock Exchanges

Stock Exchanges
Brief Excerpt from Industry Overview Chapter:

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.

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.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services are trade execution, clearing, and settlement services for securities and commodity contracts (40% of revenue); support services for financial market and clearing products (25%); and listing services for security and commodity contracts (5%). Other sources of revenue may include data products, financial indexes, and information and public company services.