The Year Of Stock Exchange Mergers?

As Valentine's Day approaches, love is blooming within the world's most prominent stock exchanges.

Yesterday it was revealed that the London Stock Exchange and Canada's TMX exchange were set to merge.

Earlier today, trading in NYSE Euronext (NYSE: NYX) was halted following merger talks with Deutsche Börse, whose trading had also been halted. Bloomberg TV confirmed that the two exchanges had been in “advanced talks” regarding merger possibilities.

Shortly afterwards, trading in NYSE Euronext resumed as CNBC reconfirmed the news and reported that a deal had not yet been reached. NYSE Euronext immediately soared more than 17.00%. (Since then, shares tapered off a little; NYSE Euronext is currently trading up roughly 14.00%.)

Following the merger news, shares of CBOE Holdings, Inc (NASDAQ: CBOE), CME Group Inc. (NASDAQ: CME), IntercontinentalExchange, Inc. (NYSE: ICE) and NASDAQ OMX Group, Inc. (NASDAQ: NDAQ) began to spike, with CBOE Holdings gaining the most at around 6.00%.

The LSE/TMX deal is expected to face scrutiny in Canada, but that hasn't stopped the London Stock Exchange's shares from rising more than 5.00%.

If the NYSE Euronext/Deutsche Börse deal comes to fruition, it could lead to an expansion in trading hours. But would the merger make it easier for Americans to invest in foreign securities and vice versa? That's what many investors are hoping for. Better still, a merger of this magnitude could push the financial markets closer to a global trading exchange, which would theoretically allow investors to trade 24 hours a day, seven days a week.

Even if this deal falls through, other financial markets – Japan, China, India, and Dubai, to name a few – are likely to explore the potential for a merger and the benefits that one could provide.

Of all the possible risks associated with a global exchange, investors are most likely to be concerned with the safety of their shares. While it is wholly possible to monitor the New York Stock Exchange during its current hours of activity, it would be impossible to fully monitor a stock exchange that never closed. Thus, investors would be forced to go to bed in fear each night, wondering what sort of changes might occur while they're asleep.

One possible solution: instead of offering a global exchange that never closes, the New York Stock Exchange could extend its hours by six (open at 6:30a.m. EST and close at 7:00p.m. EST). While this would not make trading more convenient for everyone, the extended hours would surely broaden the NYSE Euronext investor base.

This, of course, is merely speculation. Until a deal is reached, and until other global players begin to consolidate, we aren't likely to see many changes.