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U.S. editorial excerpts -3-.

NEW YORK, March 17 Kyodo

Selected editorial excerpts from the U.S. press:

MOVING MARKETS (The Wall Street Journal, New York)

Merger mania is again sweeping U.S. financial markets, with a notable new twist: Some of the hottest deals are among the exchanges themselves. Nasdaq's $4.2 billion offer for the London Stock Exchange is one more sign that competition among exchanges is spurring innovation and erasing national boundaries. With any luck, American regulators are watching -- and learning a thing or two.

The LSE has rejected Nasdaq's bid, though there's little doubt that Europe's largest equity market will ultimately seal some sort of deal. Continental exchanges have been proposing mergers with London, and the LSE is clearly hoping the New York Stock Exchange will get into a bidding war with Nasdaq. In any event, investors were delighted; Nasdaq's shares originally went up 10% on the news, while LSE's have soared by more than 30%.

This trans-Atlantic play is just the latest in an exchange merger boom.

It's amazing what a little capital-raising can do for attitudes. As more exchanges have gone public, their executives must now make money and respond to shareholders. This means they have to act like any other public company -- growing market share, branching into new products, becoming more efficient. It's also become clear that there are too many exchanges chasing after the same business, which has inspired the beginnings of a consolidation.

The laggards at this otherwise successful march into the future remain the regulators. In addition to providing customers with more seamless global trading, Nasdaq's bid for the LSE was about growing its business. And at the moment, the only real listings growth is happening overseas. Thanks for that goes to the 2002 Sarbanes-Oxley legislation, which imposes heavy financial and legal burdens on companies that want to go public in the U.S., to the great benefit of foreign exchanges.

As Nasdaq's bid shows, U.S. exchanges aren't about to sit still while others profit from laws that stunt U.S. capital markets. American exchanges also have plenty to gain by leveraging their unrivaled financial expertise in trans-Atlantic tie-ups. Yet at some point Congress is going to have to decide if it really wants the U.S. to keep eating the dust of a more sophisticated global marketplace, where international companies have growing choices about where to raise money.

That's especially the case now that many U.S. exchanges are belatedly offering new types of self-regulation designed to avoid further Enrons. Nasdaq last month announced a new market tier with tougher listing standards that would set minimums for numbers of shareholders, trading volume, earnings and market value. These benchmarks would force companies to demonstrate a certain level of financial soundness, which is arguably a more efficient and effective way of weeding out unstable companies than are Sarbanes-Oxley's requirements to hire legions of auditors. As even Nasdaq CEO Bob Greifeld -- a longtime Sarbox supporter -- has realized, ''the best solutions are internally initiated, not externally imposed.''

The recent mergers and acquisitions are proof of that statement. U.S. exchange markets are undergoing a transformation that is bringing new benefits to investors, and it all happened through competition -- not prodding regulation.

(March 17)
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Publication:Japan Weekly Monitor
Article Type:Editorial
Date:Mar 20, 2006
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