November 01, 2006

Euro Next Steps

The pending merger of the NYSE and Euro n e x t took another step t o w a rds realization, after the proposed combined company, NYSE E u ronext Inc., filed a registration statement with the SEC. The filing revealed that the group will operate as two separate entities, in a bid to prevent regulatory e n c roachment from one side of the Atlantic to the other.

The deal is not done yet, however: the Deutsche Borse continues to push its alternative offer, and Euronext’s largest shareholder has insisted that shareholders be given the right to vote on the Deutsche Borse proposal.

NYSE Under Pressure

The NYSE’s share of trading in NYSE-listed stocks fell to an all-time low in July, at just 72.6 percent. Meanwhile, the NASDAQ’s matched market share of trading in NYSE stocks topped the 10 percent barrier for the first time ever in July, rising to 10.75 percent from 8.9 percent in June. Some people think that the slow transition to the NYSE’s new hybrid trading system is hurting business at the Big Board.

ISE Stocks

The ISE launched its highly anticipated “MidPoint Match” stock market exchange, which is designed to appeal to large institutional investors looking for instant execution on stock trades. The CBOE is also planning to launch a stock exchange.


Closer The Amex says it is on track for a fourth quarter launch of its make-orbreak hybrid electronic trading system, AEMI, short for Auction and Electronic Market Integration. The AEMI system has been in development since 2004, and is the Amex’s answer to the electronic trading systems already in place at the NYSE and the Nasdaq (and virtually every other major stock exchange in the world).

The Amex has lost a significant amount of market share in both the options and equities markets over the years because of its technical shortcomings. Any major slipup or delay in the launch of AEMI could prove fatal.


The upstart Intercontinental Exchange (ICE) will acquire the New York Board of Trade (NYBOT) in a $1 billion deal that creates a new global powerhouse in the commodities market. Assuming the deal receives FTC clearance, it will significantly reshape the commodities exchange marketplace, combining the ICE’s m a r ket-leading electronic trading platform and strong energy position with the NYBOT’s dominant position in many U.S. agricultural commodities. The NYBOT will also bring currency products (USDX futures) and equity contracts (Russell index futures) to the table.

As part of the deal, the NYBOT will be able to use the ICE’s electronic trading platform while the deal is finalized.

The ICE says that the combined companies will operate a hybrid exchange, combining electronic trading with floor-based brokers.


The New York Merc a n t i l e Exchange (NYMEX) filed with the SEC for a $250 million IPO, as it looks to raise money and compete in a fastchanging marketplace. Until recently, NYMEX had a monopoly on the trading of oil futures in the U.S., while ICE dominated oil trading in Europe. Earlier this year, however, ICE launched electronically traded U.S. oil futures, and rapidly stole market share from the pit-traded NYMEX contracts.

The NYMEX responded in June by entering into a partnership with the CME, allowing NYMEX oil contracts to be traded on the CME’s Globex electronic trading system. That program has been going well, but an influx of cash could prove critical to the NYMEX’s efforts to solidify its business position.

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