For promising European stock market listing candidates, the road is increasingly leading westwards. With the British chip designer Arm and the German shoe company Birkenstock, two companies from the old world already caused a stir last year with initial public offerings (IPOs) in New York – and illustrated a trend that analysts believe will continue.

Lynn Martin, President of the New York Stock Exchange (Nyse), emphasised at the beginning of the year in an interview with Börsen-Zeitung that she wanted to set herself apart from her competitors with „strong listings of foreign companies“, saying that Wall Street offers „access to the broadest pool of investors there is“. For this reason, some companies that are already listed are seeking a dual structure that would allow them to maintain a presence in their home market – and tap into the deeper and more liquid US market.

As the US market generally offers greater liquidity, better valuations can often be achieved for dual-listed companies. Companies are now increasingly switching to the United States, where they are much more visible to global investors. „This applies to all foreign companies – but Germany is certainly a market that we are focussing on,“ explained the Nyse boss.

On a recent trip to Tokyo, the exchange's vice-chairman, John Tuttle, said that he was holding talks with a „strong pipeline“ of Japanese companies seeking US listings within the next 18 months. The Nyse also wants to attract more interest from other Asian markets. Meanwhile, Martin predicts that the window for IPOs of US companies will also open further.

The US IPO market strengthened in the first half of 2024, after slumping in 2022 compared to the previous boom year and recovering only slowly in 2023. According to the industry association SIFMA, there were 74 US deals in the first half of the year, which raised more than 17 billion dollars, with almost 4 billion dollars coming from foreign companies.

The prospect of monetary easing by the Federal Reserve has generally brightened the mood on the capital markets. There is now „cautious optimism“ for the second half of the year, comments Mark Schwartz, who is responsible for US IPOs at the consulting firm EY. However, investors must be aware that the US presidential election is influencing the environment for IPOs. This is why some companies are still aiming for a short-term listing, while others are already gearing their plans more towards 2025.

Law firm White & Case believes that the position of the US stock exchanges as „global magnets for cross-border listings“ remains intact. And analysts at PwC point out that European energy giants that are unloved at home are likely to head west in order to achieve higher valuations in the deeper and more liquid US market.

The Nyse and Nasdaq are clearly the focus of the IPO candidates. The listed parent companies of the market operators – the Intercontinental Exchange and Nasdaq, Inc.– have consolidated their stock duopoly in recent decades by taking over numerous regional exchanges.

However, the giants based on Wall Street and Times Square are no longer just competing with each other. For example, the new TXSE exchange is to be set up in Dallas, backed by investors from Blackrock and Citadel Securities with billions in funding, and will be vying for trading volumes from next year. From 2026, the Texans then want to attack the really lucrative part of the business, which is listings.

This puts the TXSE in the same mould as the Investors Exchange (IEX), or the options giant CBOE Global Markets. These have so far made only modest progress in their attempts to penetrate the market for share listings. It is also difficult for new exchanges to attract trading volumes because investors want to be active in the busiest trading centres.

However, TXSE is launching in an environment in which conditions are shifting more than they have for a long time. Dozens of companies are moving to locations with more lax regulation, and Texas is now home to more members of the Fortune 500 than any other state. The TXSE also wants to attract listing candidates with more CEO-friendly rules, after compliance costs on Nyse and Nasdaq have risen. For Nasdaq, in particular, low admission thresholds have historically been a strong argument for attracting tech companies.

Further competition for the New York market operators cannot be ruled out either. True, managers at the top of the CME Group are satisfied with their current market position as the world's largest derivatives exchange, and emphasise the clear duopoly of Nyse and Nasdaq in a „well-functioning“ market for equity listings. However, voices from the CME environment do not want to rule out the possibility of offers in the cash market for shares becoming attractive for the Chicago-based group.

If the derivatives market operator perceives strong customer demand, it could well consider venturing into new segments, such as the listing market. With reference to the high level of investor interest, the CME has already been active in brokerage since 2018 with the acquisition of NEX Markets and its fixed income and foreign exchange trading platforms BrokerTec and EBS.

On Wall Street and in Times Square, they are relaxed about challengers. However, the new competitive environment also bringing with it the threat of tighten regulation. The explosion in the number of penny stocks, sometimes defined as having a price of less than one dollar, is prompting calls for stricter listing rules, while the SEC is questioning the existing order processes.

The headwinds are blowing harder for market operators– and the Nyse will soon have to cope without its longstanding top IPO salesman. Vice-Chairman Tuttle, who convinced tech companies such as Palantir to list on the traditional stock exchange, is leaving the company after 17 years. He is moving to the Michigan-based insurance broker Acrisure, and is thus himself heading west.