ICE NYSE takeover
- Thread starter TraDaToR
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Saw this one go by:
NYSE sale to ICE and the death of stocks
By MarketWatch
SAN FRANCISCO (MarketWatch) -- To long-time market professionals, Thursday's announced sale of NYSE Euronext, owner of the New York Stock Exchange, to an upstart derivatives exchange based in Atlanta isn't the shocker it is for the general public.
Since decimalization and new market regulations effectively squeezed the margins -- and the potential for graft -- out of the system during the last decade, the business of running a stock-trading marketplace became a sideline to the only profit center left: listings.
With the initial-public-offering market moribund, that left exchanges such as the NYSE (NYX) and the Nasdaq OMX Group (NDAQ) searching the globe for a merger partner. It was a buy-your-way-to-growth strategy that seemed certain to run afoul of antitrust regulators and did with the scuttled Deutsche Bourse merger.
Meanwhile, the real growth business in the markets was happening at the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) . While there was speculation those futures and options exchanges would be natural buyers of the stock exchanges, the executives always offered a blunt, but true, reply when asked about potential tie ups: Why would we need them?
There was an exception. The newcomer to the derivatives party, the IntercontinentalExchange (ICE) needed something to vault it into the conversation -- even though it not only had profits, but market share and a valuation to rival any exchange in the world.
For all of its lackluster financial cosmetics, the NYSE is still the Big Board. It is the venue where the great corporations of the world are listed. The announced deal will have some opportunities for technology sharing and other efficiencies, but mostly its an $8.2 billion deal for a brand.
NYSE sale to ICE and the death of stocks
By MarketWatch
SAN FRANCISCO (MarketWatch) -- To long-time market professionals, Thursday's announced sale of NYSE Euronext, owner of the New York Stock Exchange, to an upstart derivatives exchange based in Atlanta isn't the shocker it is for the general public.
Since decimalization and new market regulations effectively squeezed the margins -- and the potential for graft -- out of the system during the last decade, the business of running a stock-trading marketplace became a sideline to the only profit center left: listings.
With the initial-public-offering market moribund, that left exchanges such as the NYSE (NYX) and the Nasdaq OMX Group (NDAQ) searching the globe for a merger partner. It was a buy-your-way-to-growth strategy that seemed certain to run afoul of antitrust regulators and did with the scuttled Deutsche Bourse merger.
Meanwhile, the real growth business in the markets was happening at the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) . While there was speculation those futures and options exchanges would be natural buyers of the stock exchanges, the executives always offered a blunt, but true, reply when asked about potential tie ups: Why would we need them?
There was an exception. The newcomer to the derivatives party, the IntercontinentalExchange (ICE) needed something to vault it into the conversation -- even though it not only had profits, but market share and a valuation to rival any exchange in the world.
For all of its lackluster financial cosmetics, the NYSE is still the Big Board. It is the venue where the great corporations of the world are listed. The announced deal will have some opportunities for technology sharing and other efficiencies, but mostly its an $8.2 billion deal for a brand.
Is it possible that ICE will spin off the stock trading portion of the exchange and keep the ETF portion? Is that what this is about?
When I look at the volume bars on a chart of the Dow Jones Industrial Average, it's plain to see the diminishing volume over the years. When ETF's first started coming out years ago, I thought that they would take a lot of business away from the OEX options traders, and they did. But it never dawned on me that it would destroy stock trading as well. Some people say that decimalization squeezed the profits out of stock trading too, but I don't really think it had that big of an impact - I remember seeing tiny spreads back in the days of fractions too. The less liquid stocks still have wide spreads today, plenty for a specialist to keep making his mortgage payments.
When I look at the volume bars on a chart of the Dow Jones Industrial Average, it's plain to see the diminishing volume over the years. When ETF's first started coming out years ago, I thought that they would take a lot of business away from the OEX options traders, and they did. But it never dawned on me that it would destroy stock trading as well. Some people say that decimalization squeezed the profits out of stock trading too, but I don't really think it had that big of an impact - I remember seeing tiny spreads back in the days of fractions too. The less liquid stocks still have wide spreads today, plenty for a specialist to keep making his mortgage payments.
Nah very little to do with basic exchange volumes as we know it. More to do with much jucier margins on the trade clearing / back end side of things [this is how ICE has basically become a big player - not through dog dirt coffee volumes] - all triggered off by regulatory overhaul, hence why CME wants a foothold in Europe too, to clear all the OTC swaps that will have to be CCP next year.
I think ICE Have said they will look at spinning off the euronext cash markets, unless Nasdaq/omx want it then its probably definitely going to be Deutsche Borse.