Competition and Survival of Stock Exchanges: Lessons from Canada

Abstract

We analyze the competition between two developed stock exchanges. Their development rests mainly on their capacity to attract securities and trades. The US market is attracting a growing number of Canadian companies and is capturing a growing portion of their traded value. This slide of trading toward the US market is a huge challenge for Canadian policy makers while the efforts to compete with the US market seem to be having only limited effects. We analyze the implications of this situation for policy makers in Asia-Pacific where several markets and financial centers are attempting to emerge.

International Price Discovery in Stock Markets - A Unique Intensity Based Information Share

“…Small national exchanges will lose their share in trading to large international exchanges, which provide a more efficient trading environment. Carpentier et al (2007) examine this development for the Canadian stock exchanges with respect to the US markets. They report a rapidly growing share of US markets in trades of Canadian stocks up to the point where interlisted stocks are absorbed by the foreign market and delisted on the home market.…”