Hedge funds are manipulating mergers - NYSE

Long-term shareholders in the world's biggest stock exchanges should beware of being bounced into bad mergers by short-term hedge fund investors, the chief executive of the New York Stock Exchange, John Thain, has warned.

His comments come amid another burst of speculation over consolidation among the world's equities, futures and commodities exchanges, and as the NYSE works to cement its merger with the Paris-based Euronext.

The London Stock Exchange is continuing to build defences against a possible takeover by NYSE's rival, Nasdaq, and there are new rumours two of the biggest commodities exchanges - the Chicago Board of Trade and the London Metal Exchange - could begin informal talks this week.

Shareholders in Euronext have been told by the NYSE's brokers about suspicions that hedge funds may have been helping Deutsche Börse in an effort to flatter the price of the German bid for Euronext in comparison to that of the NYSE. A spike in short-selling, which pushed down NYSE shares in the summer, coincided with share buy-backs by Deutsche Börse which underpinned its own share price.

And Mr Thain said the animus for a Deutsche Börse-Euronext deal was mainly coming from hedge funds, such as TCI, which hold stakes in both companies, with little thought for long-term value creation.

"You have to remember that TCI has a very, very large stake in Deutsche Börse, and their biggest concern is how to get out of that. They don't want to be stuck with that. But what is good for TCI is not necessarily good for Euronext or for its other shareholders," he said.

"Werner Seifert, when he was Deutsche Börse chief executive, wanted to buy the London Stock Exchange at 530p per share, and that would have created one of the most successful and powerful exchange business in the world. In today's world he would look like a genius, but he got fired - by TCI."

Both sides in the stand-off between Nasdaq and the London Stock Exchange believe hedge fund operators are the source of market rumours and stories about the companies' likely next moves, including whether Nasdaq will move quickly with a new bid and whether Clara Furse, the chief executive of the LSE, has identified a "white knight" counter-bidder. The LSE believes between 20 and 30 per cent of its shares are held by hedge funds, but has had to piece together details of its owners because many hide behind trading accounts at the big investment banks. Mr Thain added that a takeover of the LSE by Nasdaq would "help Nasdaq a lot, but be negative for London".

Hedge funds have been agitating for an early cash offer from Nasdaq, which has 25 per cent of the LSE, but will have to bid at least 1,243p per share if it moves before spring. A newspaper report at the weekend cited LSE investors who said they had been canvassed by Nasdaq on whether they would accept an immediate 1,243p-a-share offer, but Nasdaq said the report "implies a degree of proactivity on our part which we simply do not recognise".

The LSE has been considering seeking a white knight, and may also seek to join the NYSE-Euronext combination.

Now exchange industry insiders are predicting commodities exchanges could join in the wave of consolidation after the boom in commodities and futures trading sent their shares to record levels.

The Chicago Board of Trade, whose stock hit an all-time high on Friday, is examining strategic deals, but declined to comment on a report that it would bid for the London Metals Exchange. A spokeswoman for the LME said: "We are not talking to anyone at the moment."

Suggested Topics
News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
Voices
voicesI like surprises - that's why I'm bringing them back to politics, writes Nigel Farage
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
news

As anti-Semitic attacks rise, Grant Feller re-evaluates his identity

Arts and Entertainment
Adam Levine plays a butcher who obsessively stalks a woman in Maroon 5's 'Animals' music video
music'Animals' video 'promotes sexual violence against women'
PROMOTED VIDEO
News
people Biographer says cinema’s enduring sex symbol led a secret troubled life
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people

Kirstie Allsopp has waded into the female fertility debate again

News
The moon observed in visible light, topography and the GRAIL gravity gradients
science

...and it wasn't caused by an asteroid crash, as first thought

News
people
Life and Style
food and drink

Savoury patisserie is a thing now

News
ebooksAn unforgettable anthology of contemporary reportage
News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
News
Gillian Anderson was paid less than her male co-star David Duchovny for three years while she was in the The X-Files until she protested and was given the same salary
people

Gillian Anderson lays into gender disparity in Hollywood

News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?