NYSE for sale means what?
By Dian Vujovich
For anyone not paying attention, our economic world is changing as the once mighty New York Stock Exchange, that began when two dozen merchants got together and signed the Buttonwood Agreement back in 1792, is about to change again.
The NYSE’s days of world domination and top-of-the-heap order have been diminishing for years thanks to a couple of things—high tech trading and the ‘M’ word: mergers.
In 2007, the New York Stock Exchange Group merged with Euronext and became NYSE Euronext and formed a huge global marketplace. Now the German exchange, Deutsche Borse, plans on buying the NYSE Euronext. Of course, they’ve tried twice before and it appears as though the third time is the charm–the deal is likely to be announced tomorrow. But, charm for whom?
First, let’s begin with a new name. Will it exchange be called the “DB NYSE Group” as the buyer would like? Or, will Senator Chuck Schumer’s will win out. He says he’ll support the merger as long as “New York Stock Exchange” begins the name.
Putting the naming of this deal aside, what’s more important is how this new exchange impacts the investor.
In case you haven’t noticed, the NYSE isn’t your father’s stock exchange. It hasn’t been for, well, close to a couple of decades. Ever since things like computer trading and algorithms have ruled bids/asks/buy/sells, investment products have been sliced and diced into products no one understands and time cut into itsy bitsy pieces. Some of which has been quite visible in other countries around the globe for years.
One simple example: I remember visiting the stock exchange in Hong Kong about 12 years ago. Of course I was America-centered thinking we were/are the country that does everything first and the best. Oops, not so. One look at the floor from the gallery and what I saw was rows and rows of computers with hardly anyone sitting behind them.
There was no yelling, screaming or rushing around of brokers exercising trades or a floor cluttered with tickets from trades completed. Only silence.
During that visit, than another to Kuala Lumpur, I also learned that cell phone use in that region of the world was ions ahead of ours. Eons. Funny how traveling outside of the United States will show you things you’ve never even dared to dream.
Back to today’s investor and tomorrow’s exchanges.
Felix Salmon wrote an interesting piece yesterday on The Opinion Pages in The New York Times. From it:
“The Tea Party is right about one thing: What’s good for Wall Street isn’t necessarily good for Main Street. And the Germans aren’t buying the New York Stock Exchange for its commoditized, highly competitive and ultra-low-margin stock business, but rather for its lucrative derivatives operations
He points out that companies listed on American exchanges are valued at more that $17 trillion, “But the glory days of publicly traded companies dominating the American business landscape may be over.”
Read the entire piece at: http://www.nytimes.com/2011/02/14/opinion/14Salmon.html?_r=1&hp
To read more articles, please visit the column archive.