Markets are constructs.  By that we mean that men (and women) define the parameters by which a market operates.  Sometimes we forget that simple lesson.  That is not say that there are not exogenous factors that affect how a market operates.  Regulation (and politics) is a prime driver, as is technology.  Indeed the current wave of exchange consolidation is driven by the affect technology has had on trading.  In large part, by making exchanges, especially stock exchanges, less central to the process.  Ironically those firms that drive electronic trading are now the establishment.  In that they have the most to lose by a change in rules and regulation that might affect their trading.  Futures in a certain respect avoid some of those issues by making a centralized contract the transaction vehicle.  There is much political teeth gnashing about the potential takeover of the NYSE but the fact remains that technology has been eroding the position of the NYSE and other stock exchanges for some time now.  In today’s screencast we look at the state of the latest wave in exchange mergers.

Items mentioned in the above screencast:

Why the stock market business stinks.  (Points and Figures)

Electronic traders are the new establishment.  (Twitter)

Tough crowd.  Germany doesn’t like the NYSE Euronext (NYX) deal either.  (The Source)

Don’t discount the role of nationalism in the exchange debate.  (Humble Student of the Markets)

A price performance chart of the exchange stocks since the CBOE (CBOE) IPO.  (StockCharts)