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2020 has been a wild year for exchange M&A. More than $80 billion of exchange deals have been announced or closed this year. 2021 holds just as much promise for consolidation. A thread on my 2021 exchange M&A predictions:

First, the playing field. Potential M&A targets & acquirers in 2021: TMX ($6B market cap) CBOE ($10B) FactSet ($13B) MSCI ($35B) MarketAxess ($21B) Bloomberg (~$75B) Deutsche Borse ($30B)

The market likes transformative deals when exchanges *diversify* - combining high margin transaction businesses with recurring subscription revenues. "Vertical integration" is also smiled upon - an exchange buying data distribution firms as an example.

CBOE and FactSet stick out as likely M&A targets. Both are small enough to buy. Both are "one dimensional" - Mostly transaction or mostly subscription businesses. Both are un-loved because of their one-dimensionality.

I think MSCI & Moody's could combine in the future. Two of their biggest competitors just merged in S&P & IHS, pairing ratings & analytics with a powerful index business. What's to prevent a merger to take them on?

I could also see Deutsche Borse buying CBOE. DB1 has tried to get in on US equities in the past a-la failed NYSE bids, and CBOE's planned European expansion could be causing them to sweat. Only barrier would be anti-trust.