TSE signs deal with NYSE

The Tokyo Stock Exchange (TSE) and the New York Stock Exchange (NYSE) have signed a letter of intent establishing a strategic agreement between the world’s two largest exchanges.

The agreement outlines the exchanges’ future collaboration on trading systems, technology, the cross-listing of shares, new products such as exchange traded funds (ETF) and market data products, corporate governance and regulation. It also sets the scene for a capital alliance between the exchanges, but there are no plans as yet for a full merger, according to TSE spokesman Mitsuo Miwa.

John Thain, NYSE’s chief executive, said: “We believe this strategic alliance will bring greater liquidity and improve access for investors to our market. Combined with Euronext, we are building the world’s first truly global market-place, trading multi-asset class products, across multiple time zones in multiple currencies.”

The TSE, which is still planning to go public before the end of 2009, and the NYSE have been discussing this tie-up since early 2006. Their collaboration dates back to a June 2002 agreement to share market surveillance information.

Both exchanges have also been seeking alliances elsewhere. The TSE signed MOUs on cross-border trading and exchanging information with the Shenzhen Stock Exchange, the Korea Stock Exchange, the Shanghai Stock Exchange and the Taiwan Stock Exchange in July and August 2006, and earlier this month Nishimuro said alliances with the London Stock Exchange and Deutsche Börse could be possible later this year.

The NYSE agreed to buy Euronext in June last year (see: NYSE-Euronext wins landslide shareholder approval) and has also expressed an interest in forming links with China.