The financial centre of Paris is more than a theoretical concept

The financial centre of Paris is more than a theoretical concept. Rather than focus on the real criteria for a financial place (jobs, funding for the companies shares and bonds, stock of collective management, etc.), only account today the market capitalization of companies, and markets in particular companies. Thus, Deutsche Börse, with its more than $ 15 billion capitalization, is trying to buy NYSE Euronext, whose market capitalization rises to about 10 billion!

In the battle of 2006 between Euronext (first place market European since 2000) and Deutsche Börse, it had been pointed out that Euronext was a financial anchor key for the French economy and that such amalgamation is would be translated by a relocation centres of decision and the abandonment of a transnational federal model which was and remains one of the most effective in the world market infrastructure (technology platform). It was, moreover, criticized Deutsche Börse its model of vertical integration in elevator (incorporating activities of regulation and compensation), then decried by the European Commission. If the construction of Europe was driving to prefer a rapprochement between Euronext and Deutsche Börse, certain loss, for Paris, decision-making bodies and the end of the Federated model led to a transatlantic alliance. Promises no urging that those who listen, NYSE took power but still left to develop the federal model of Euronext.

The phenomenon of demutualization of the awards, begun in the 1990s, has introduced performance constraints. It has mainly led to a wave of mergers and acquisitions logically justified by the new "business model", from the technological and computer revolution for the realization of economies of scale and requiring a diversification, in particular in the field of derivatives, market segment recording the strongest growth.

The European directive markets in financial instruments (MIF) has strengthened the competitive environment of enterprises in market by introducing an additional competition with financial institutions. Indeed, the end of the rule of concentration of orders allowed to create electronic platforms for transactions with much less stress than markets companies (no requirement of listing - very profitable activity-, no duty rating and illiquid securities transaction and therefore few profitable), or even quite unequal transparency constraints. It is a destructive competition on the part of these electronic platforms, in particular those belonging to the financial institutions which may be the subsidisation in terms of transaction costs.

Therefore, the apparent costs decrease strongly decreases the profitability of markets... which are reduced to merge. Nyse Euronext-Deutsche Börse merger would lead to a European monopoly of organised derivatives markets! In short, by seeking to strengthen competition, the European Commission gets a result paradoxically opposite to that desired... What efficiency!

It's time that regulators Europeans are concerned about the social utility of companies markets rather than approach a microeconomic which led to falsely questioned the apparent transaction cost, but ignoring completely implicit costs and macroeconomic consequences. Regulators must adopt a macroeconomic view and do not believe, as understood banking regulators that prudential supervision to automatically obtain optimum macroprundentiel.

Finally, and most importantly, it's time that stakeholders in the financial hub of Paris adopt a collective behaviour, and that one stops to consider that a financial market depends solely on the "size" of banks, obtained through leverage.