As a consequence, exchanges are open to bids from all kinds of buyers. Maybe even other high-tech companies with highly valued shares will enter the bid. The main idea behind OM s bid is that superior technology and management skills create a more cost-efficient exchange towards which trading migrates. Although OM s success so far may suggest that the location of an exchange is of less importance, this is far from certain. Actual proof of migration of trading is rather scant.
Companies still seem to prefer their national exchanges.
Hau explains this by the existence of information asymmetries caused by cultural barriers and distance from headquarters, which lead to less insider knowledge. This suggests that trading is not just taking place on a computer screen, and that those operating the computer need the same amount of information as before. Therefore, it is far from certain that OM may persuade the shareholders of the LSE that its lack of market size is compensated by its proven technological and management record. The alternative vision of merging traditional exchanges and thus adding volume still has numerous attractions. Clearing and settlement Trading of equities does not end once the intention to trade on the exchange is decided upon.