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Nasdaq/ICE Bid for NYSE

4 April 2011 - News - Editor

With Nasdaq's bid to take over the New York Stock Exchange, it may seem that the days are numbered for the trading floor that NYSE is renowned for. With Nasdaq OMX continuing to extol the benefits of all-electronic trading, will the historic NYSE trading floor where fortunes have been made and lost amidst the organized chaos of buying and selling, become a relic of the past?

Together with Intercontinental Exchange (ICE) of Atlanta, Nasdaq OMX put in a cash and stock offer valuing the NYSE at around $11.3 billion, promising a reduction in expenses of $740 million in three years and raising fears that shutting the iconic trading floor would be one quick way of cutting costs. But CEO of Nasdaq OMX, Robert Greifeld, has noted that the trading floor still has immense value in the world of high finance on Wall Street and there would be no plans to close it down should the deal be approved. Greifeld referred to the Nasdaq takeover of the Philadelphia Stock Exchange in 2008, where the open trading floor has grown, as an example of the value of this method of trading.

Other exchanges around the world, including the London Stock Exchange, Boston Stock Exchange and Toronto Stock Exchange, as well as the London International Financial Futures and Options Exchange and the International Petroleum Exchange, have closed their trading rooms in favor of electronic trading which allows investors to trade wherever they choose. Nasdaq was a driving force behind the progress in electronic trading, with US regulators buying into the concept and pushing ever increasing trading volumes into this new high-speed, low cost method of trading.

The Nasdaq OMX/ ICE offer upstaged the offer made by the Deutsche Bourse for NYSE which currently is valued at $9.26 billion. Nasdaq offered an unsolicited bid of $42.50 in cash and stock for each NYSE Euronext share. This offer is approximately 20 percent more than the closing price on March 31 of $35.17, whereas the Deutsche Boerse offer was $35.43. Whichever way it goes, the proposed deal is in its very early stages, with months of negotiations and scrutiny by regulating authorities up ahead. In this fast-moving world we live in, it remains to be seen whether the start of trade bell will continue to ring in the trading floor of the New York Stock Exchange.

 


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