Stock Market Competition: Bolsas & Mercados

As stock markets switch to for profit enterprises, a process of consolidation is taking place.  The NYSE merged with Euronext and Nasdaq acquired the Nordic Exchange.  There are some redoubts, however, and one of them is in Spain.  Currently, the Bolsas & Mercados Espanoles SA has managed to remain unacquired while doing, apparently, a booming business.  According to the WSJ, BME was the eighth largest exchange by value of shares.  The article described the exchange as efficient, with "tight cost controls" and profitable.  It sounds like a recipe for success. 

But in fact not all is well at BME.  The share prices of the exchange have declined by 60% over the last nine months.  Part of this is a result of reliance on equities for a good chunk of the exchange's profits at a time when sales are down.  What has kept the BME independent?  Most likely the government's ability to veto any acquistion of 1% or more of the company's stock.  Likewise the entity has only five directors who are independent out of a 15 person board.  

BEM will remain independent as long as the government desires.  But were the market to decide, BME would become part of a larger trading network that allows for economies of scale and offers easier accessibility to a larger number of buyers.