London and Canadian Stock exchange Merger

Confirmation that the LSE and the Canadian Exchange - the 150 year old TMX, have officially merged has been announced.

The group will have a combined value of around £5.5 billion pounds and be the 6th largest in the world. 

Why merge?

Liquidity is a huge reason where investors trade where they trade.With the globalisation of markets, the money goes to the Exchange that has the liquidity, the product range, which has to include derivative products and the tightness of spreads between buying and selling prices,that allows investors to get in and out of a deal cheaper. 

Clearly with  a merger of this type, understood to be of equals, though the LSE is valued slightly higher, there will be substantial cost reductions as the coming together of these two historic exchanges progresses.

There will be co-headquarters in London and Toronto and the management will be drawn from both sides. The new group will benefit from the Canadian Derivative experience that the LSE lacks and have an unrivalled portfolio as far as Mining stocks go.

LSE share price increases by over 10% at London opening Wednesday morning