"N.Y.S.E. Merger Deal No Threat to U.S. Markets"

Americans shouldn’t fear a German takeover of the New York Stock Exchange. Politicians are getting antsy — even about the merged entity’s name — and some may use the deal to criticize last year’s financial legislation.

That’s a superficial and illogical response. N.Y.S.E.’s purchase of Euronext didn’t emasculate European markets. And this deal, whose details are expected on Tuesday, won’t ruin America’s. What happens on markets matters more than who owns them.

That doesn’t mean Senator Charles Schumer isn’t entitled to insist that the combo put the New York brand first. It’s in his interest to promote his home town as global financial center. And he may have saved the new group some communications consulting fees. The Big Apple and its connotations make for a better brand than the generically Teutonic alternative.

But for New York to thrive as a financial center, it needs its backers to move on from an antiquated picture of the Big Board as a floor where burly men wave General Electricshare certificates or where only stocks are traded. To retain its role as a financial hub, it must lead in innovation and technology, and above all represent itself as a place where the interests of investors are well served.

On its own, N.Y.S.E. Euronext was in danger of losing out in this race. The Nasdaq, Hong Kong and London exchanges challenged it for new listings; the Chicago exchanges led in the innovation of indexes, futures and other derivatives; and rival trading platforms have eroded the profitability of its once-core stock trading business.

The Euronext deal in 2007 gave the N.Y.S.E. access to a lucrative European derivatives business, whose operating profits now top those generated by the combined company’s cash trading and listing services. Moreover, because electronic trading has made cash transactions a volume game, a tie-up with Deutsche Börse should channel more business New York’s way. The German group’s Eurex joint venture also owns the International Securities Exchange, a big United States options exchange. The planned partnership — even one where the N.Y.S.E.’s shareholders call only 40 percent of the shots — should bolster New York’s position.

Moreover, though exchanges are going global, regulation is still local. That helped overcome parochial sentiment in Europe when the N.Y.S.E. merged with Euronext. Legislators worried about the future should focus more on keeping America’s financial centers on top by promoting fairness, good corporate governance and impeccable transparency. A name, after all, is just a name.

Swiss Secrecy

Switzerland just made life more difficult for despots. The country’s decision to freeze assets belonging to Hosni Mubarak smacks of hypocrisy: after all, the former Egyptian president and his family have long been accused by critics of enriching themselves at the country’s expense. But in the absence of a global deal to stop heads of state from exporting the spoils of office, Switzerland’s approach is better than nothing.

A few weeks earlier, Switzerland also froze all potential assets belonging to Tunisia’s former president.

It’s not clear what the Mubarak clan might have squirreled away. It’s also not certain what proportion of the purported fortune is stashed in Switzerland. Nevertheless, the country’s decision seems rather late. If the Swiss — and other countries — were really serious about state-sponsored looting, shouldn’t they refuse to accept suspect deposits in the first place?

In practice, it’s hard to bar banks from doing business with a sitting head of state, particularly one that’s a close ally of the United States. Financial sanctions have made it harder for international pariahs like North Korea and Iran to access the financial system. But not all corrupt dictators face the same constraints.

A global rule preventing heads of state from moving more than a certain sum abroad while in office would do the trick. Politicians who had nothing to hide would have little to fear from such a regime. However, there’s little prospect of such an accord being agreed to, let alone properly enforced.

Switzerland’s latest move is unlikely to have despots quaking in their palaces. Alleged kleptocrats 

Source: nytimes.com

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