Stock exchanges have been transformed as a result. In the United States, both the New York Stock Exchange and the Nasdaq Stock Market are now part of broader, more global companies.
The London exchange has tried to do the same. Two years ago, European antitrust regulators blocked it from merging with Deutsche Börse Group, a deal which would have created a major market operator across Europe. It also tried to combine with the Toronto Stock Exchange nearly a decade ago.
Its appetite for a deal with the Hong Kong exchange is not clear, however. The Refinitiv proposal represented the London exchange’s own major bet on how to navigate shifting financial markets. Market data has emerged as a potential area of growth. The deal with Refinitiv would be a $27 billion transaction, including debt, and could make the exchange too big and difficult for a suitor like the Hong Kong exchange to buy.
Mr. Li and other Hong Kong exchange executives said the Refinitiv deal had galvanized them to act. “We know we were late,” Mr. Li said, “and we don’t want to be late again.”
The Hong Kong exchange is making its offer at a turbulent time. It has long prospered from Hong Kong’s traditional status as a gateway between mainland China and the rest of the world. Many big state-run Chinese companies have listed there, and global investors have flocked to Hong Kong to buy shares of fast-growing Chinese companies like Tencent, the powerful internet conglomerate.
Those ties have begun to be a burden, however. The trade war between the United States and China has contributed to a slowdown in trading on Hong Kong’s exchange.
In the longer term, the exchange and other Hong Kong companies face difficult questions about their future.
Hong Kong is Chinese territory but operates under its own laws, which international businesses and investors find attractive compared with conditions on the mainland, where the courts are undependable and controlled by Beijing. But the recent mass protests, fueled in part by a more assertive hand from Beijing in Hong Kong affairs, have raised questions about how long that arrangement can last. On Friday, Fitch Ratings, the credit rating firm, downgraded its outlook on Hong Kong, saying the unrest had tested the city’s capacity to remain distinct.
On Wednesday, Mr. Li rejected the idea that the Hong Kong exchange would want to loosen its ties to the mainland. He noted London’s ambition to become a global center for trading in the renminbi, the Chinese currency, and said the Hong Kong exchange could help fulfill that. Beijing heavily restricts the currency from crossing its borders, but some Chinese officials have openly discussed a day when the world might use the renminbi as commonly as they use the American dollar, which would give China greater say in the global financial system. Should London become a hub for renminbi use, more Chinese companies and investors would consider the city an even more attractive place to do business.
The Hong Kong exchange’s offer also represents a ringing endorsement of London’s future despite the uncertainty stirred up by Britain’s effort to leave the European Union, which has left many questioning the city’s prospects as a financial hub.
“We see no reason why any of the temporary difficulties and challenges that everybody is going through should be the obstacle for some great things to happen,” Mr. Li said.
Under the Hong Kong exchange’s offer, shareholders of the London exchange would receive a mix of cash and stock that would value the company at $36.6 billion, roughly 20 percent more than the shares were valued at earlier this week.
The Hong Kong exchange said most benefits of the merger would come from fusing technology. The Hong Kong exchange has been looking to bolster its trading systems. In return, the combined company could offer companies and investors a broad, common platform for trading that would be open 18 hours a day.
This content was originally published here.