Companies in this industry operate physical or electronic marketplaces to facilitate the buying and selling of stocks, stock options, bonds, or commodity contracts. Major companies include the New York Stock Exchange (owned by Intercontinental Exchange), Nasdaq OMX Group, and CBOE-owned BATS Global Markets (all based in the US), as well as Japan Exchange Group (formed by the merger of the Tokyo Stock Exchange and Osaka Securities Exchange), London Stock Exchange, and Euronext (Netherlands). Regardless of their location, major securities exchanges are global in scope.
Demand is driven by investor confidence and companies seeking access to public capital. The profitability of individual exchanges depends on maximizing transaction and clearing fees while keeping transaction-based expenses low. Large companies have advantages in volume of shares traded, their ability to attract large company listings, and access to public capital in foreign markets. Smaller exchanges can compete effectively by specializing in smaller companies, sectors, such as technology stocks, regions, or specialty financial instruments. Most companies ultimately chose to list on their domestic stock exchanges. The industry in the US is highly concentrated: the four largest firms account for about 85% of revenue.
Products, Operations & Technology
Major services are trade execution, clearing, and settlement services for securities and commodity contracts (about two-thirds of industry revenue), listing services (15%), and trading and clearing systems services (5%). Other sources of revenue may include data products, financial indexes, and information and public company services.