The London Stock Exchange has lost out in its drive to expand in the Middle East, after rival NYSE Euronext beat it to a $250m (£127m) strategic partnership deal with Qatar's stock market.
NYSE Euronext, the transatlantic exchange, yesterday announced it had sealed a strategic partnership with the state of Qatar, "which will transform the Doha Securities Market into a significant international player". It paid $250m to take a 25 per cent stake in the Middle East exchange.
Qatar has been looking at a significant partnership with an international market for two years and had intensified its search since January. The LSE was widely considered a favourite as Qatar owns a 15 per cent stake in the UK exchange.
Yesterday's statement said NYSE had submitted "the most attractive offer as part of a competitive bidding process" which is understood to have interested a number of the world's largest exchanges along with the LSE, including the US's Nasdaq and Deutsche Börse in Germany.
This comes as a blow to the LSE, which has been working on a commercial agreement with Qatar for "some considerable time," according to a source at the exchange. It is understood part of the reason it lost out was its lack of a world-class derivatives platform. NYSE owns Liffe, one of the biggest in Europe.
Some analysts said the move could raise question marks over Qatar's long-term commitment to the LSE and its 15 per cent holding, which has halved in value since February. But Qatar moved to quell fears, calling the stake a long-term investment and saying it will look to collaborate in the future.
The deal will see the creation of a new integrated cash-and-derivatives exchange in Doha, with a technology platform provided by NYSE, and is expected to close before the end of the year.
The search is under way for a new chief executive and management team and the Qatar exchange hopes to float a minority stake on its market within three years. Qatar's prime minister and minister of foreign affairs Hamad bin Jassim bin Jabor Al-Thani said yesterday's deal was a "significant development" for Qatar and the Middle East.
The move will significantly increase NYSE's presence in the Middle East after it signed a technical partnership arrangement with the Abu Dhabi Securities Market earlier this year. The latest investment is its biggest outlay since the merger that brought together the New York Stock Exchange and Euronext last year.
There is a race to build up financial centres in the Middle East with Doha, Bahrain and Abu Dhabi all looking to challenge Dubai's position as the leading market.