The working of European Union was expected to be similar to the United States of America. Theorists believed that Europe will have a financial hub similiar to the Wall Street in the United Sates and questioned the future of the European Union. Establishing inter-market deals among the European stock exchanges (E.g. the creation of Euronext) seems to be the first move towards creating a global European stock exchange. However, the national interests and the needs of a country's economy is a major factor of concern. However, this will not affect the position of Europe in the financial world, even with the emergence of the Asian financial markets.
These three stock-exchanges benefit from their home market, especially London, which is already the main financial centre in Europe.
London has become the main European financial centre and houses the headquarters of many banks and investment funds. Moreover, it benefits from a historical preeminence in the financial field. Although London benefits from the economical dynamism from the UK, many foreigner companies are also listed on the LES.
Bourse de Paris and Deutsche Börse benefit from the size of the French and German economies. Major French and German companies are listed on their home market and contribute hugely to the size of the national stock exchange.
Other European financial centers do not benefit from this advantage but can present other attractive conditions for investors or companies.
[...] But financial transactions are not limited to equity and for instance Luxembourg has a very competitive position for the convertible bonds issues, few documents are required and it makes it easier and faster for a company to issue a convertible or an exchangeable bond on this market. What leads to the idea of a future unique European financial centre is that last years were characterized by a huge emulation around stock exchanges financial structures. 1B. a new dynamic in the market environment in Europe B1. A new trend for European stock exchanges: the IPO Recent IPOs of Euro next, Deutsche Börse, OM Gruppen (Stockholm stock exchange) show the dynamism of the European stock exchanges. [...]
[...] Shall we go toward a unique computer financial centre or to say it in another way, no physical financial centre at all? As long as financial actors will be human, they will clearly need to sleep, to be physically somewhere, etc. So there will always be at least 3 financial centers, one in Asia, one in Europe and one in the US. Moreover, if you can “computerize” the financial markets, you must not forget that financial markets do exist only because real companies from the real economy need some money to finance their development. [...]
[...] Obviously, there might be a globalization of trading activities but corporate finance centers should remain national for the main countries (France, Germany, Italy) and regional for others (one office for a group of countries). Conclusion To conclude I would say the future of European financial centers is unclear: they will surely link together or merge but there undoubtedly will remain a number of major financial markets, since financial actors can not part completely from the real economy. The European finance will have also to experience some of the European Union difficulties as the integration of Eastern-European economies. [...]
[...] The only drawback could be that US and EU investments would go on Asian markets because of higher yield but they already do through private equity and direct investments in local companies and structures. Moreover, Europe has a strategic geographical location: European stock exchanges open when Asian stock exchanges close and they close one hour and a half after the opening of New-York. Europe will remain a key financial centre as it does the link between these two ends of the financial worlds. B2. The globalization of the financial markets thanks to the new technologies The global platform forecast by the NASDAQ will enable investors to trade shares 24H/24H. [...]
[...] Every stock exchange develops its characteristics. Euronext launched the first contracts on wine with its Winefex (wine future exchange project) when other stock exchanges use the particularities of their home market. For instance, two football clubs (AS Roma and Lazio) are already listed on the Milano stock exchange and the Torino Juventus should follow in the next weeks. Thus two options can be imagined for the future of the financial centers: first we can think about a single stock exchange for the whole Europe or a specialization of every national stock exchange (London for the industry, Paris for the services, Frankfurt for the new technologies, etc.). [...]
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