A year ago, many Europeans were worried about US regulatory imperialism. But they shouldn’t have bothered. The NYSE takeover of Euronext could turn out to be another stage in the international retreat of US financial markets.
When the deal was first mooted in May 2006, the Americans made it clear that they didn’t want to apply the onerous Sarbanes-Oxley regulations on companies listed only on the Euronext exchanges. But many Europeans thought that some combination of patriotism and political pressure might lead the New York exchange to impose a single, US-style set of rules on the combined operations.
The concerns were strong enough for Charlie McGreevy, the EU internal market commissioner, to promise to fight off any US regulatory attack. The UK government even passed a law to protect the London Stock Exchange, should it fall into US hands.
But if anyone should worry about losing regulatory sway, it is the Americans. When NYSE was purely domestic, it took a great interest in attracting foreign listings. Now that it has an alternative platform for international companies, the interest may wane. Indeed, NYSE is sending Catherine Kinney, its head of listings, to Paris. Her principal goal will be to steal international listings away from London, which has been gathering companies from all corners of the globe. The reorganization may be in part a sop to European sensibilities—after all, they have just lost complete control of an exchange—but it is a reasonable piece of corporate strategy. If global firms don’t like US rules and lawsuits, then it makes sense to offer them an alternative.
US regulators and legislators have already started to respond to the erosion in the country’s position in the global financial industry. The efforts to make the country more friendly to global business may yet pay off, but it is too late to stop the de-Americanization of the New York Stock Exchange.