Just as the Occupy Wall Street sit-down fails to recognise that most of the lamented disasters in the economy were enabled by Washington, a modest three hours by Amtrak to the south, the recent spate of exchange merger proposals fails to identify the real enemy.

These proposals are usually between exchanges that have already achieved primacy in one or more product lines - the "go to" markets for this-or-that. Few would bother to challenge an entrenched exchange and success would be surprising even if they tried.

Merger brings dominant market positions under the same roof. This a an undeniable convenience, especially if common clearing results. But it does not assure that any of the products will gain volume.

Even cost-savings from the consolidations may lag when a merger implicates more than one regulator. The Deutsche Boerse/NYSE-Euronext combination could involve nine regulators. Two in the US, one in Germany, the Swiss and, by reason of the Euronext consortium, market regulators in Belgium, France, the Netherland, Portugal and the UK. Each will want a seat at the table for what they perceive to be decisions affecting their respective constituents. The organisational chart may look global but the managers will continue to have to think local.

All that aside, exchanges no longer compete with each other. Their threat comes from off-exchange securities dealers and trading platforms as well as the over-the-counter derivatives (largely swaps) market. Both are huge and growing.

But what about the Dodd-Frank Act in the US and the efforts in Europe to compel more exchange-based trading and wider use of clearing systems? Won't that re-balance the equation in exchanges' favour? Good question.

Answer: not likely, at least in the US. The Dodd-Frank Act exempts from exchange trading and clearing all commercial swaps hedging, the vast foreign exchange swaps market (serving the $4 trillion-per-day cash FX business), as well as customized swaps that are not suitable for listing or clearing. I have asked repeatedly for estimates of what percent of all swaps will thus remain private, to no avail, but it is a big number.

So, the exchanges are likely to continue to face fierce competition from the off-exchange regime.

Below is a parable with two endings. You choose which is the better one:

Two blacksmiths in a small town competed for 30 years to shoe the townspeoples' horses. One day, the first automobile rumbled down the main street. Recognising that something important was happening, they set aside their rivalry and met to discuss a response. When they emerged, they announced: "Ladies and gentlemen, we have decided to . . .

a) merge our blacksmith businesses

or

b) pool our resources and buy a car dealership."

Exchanges can merge if they wish but, in my view, they might either or also consider entering the off-exchange space to address the real and growing threat there.

I love exchanges. During my 50-year career, I provided legal services to 33 exchanges in 21 countries, some for a decade or more and a few for a generation. These thoughts are shaped by that proud experience.

Philip McBride Johnson is a former partner at Skadden Arps