Saturday, April 23, 2005

Archipelago Exchange Merges with the NYSE


Recently Archipelago Exchange(ticker symbol AX) merged with the New York Stock Exchange. This was a significant event because the NYSE and the AX had been engaged in a nasty war of words for years as evidenced by this billboard, above, which I walk by every day on the way to work. In this billboard AX is taking NYSE to task for routing their orders to firms "on the floor", who manually place the orders, instead of routing them electronically.

I think that there will be some odd times together when these traditional enemies are merged into a single firm.

For the city of Chicago this is a big win because AX is a Chicago company that has de-facto taken over the illustrious "big board" in NY. We need some wins - we seem to lose headquarters here all the time and some of the ones that are left (Boeing) are mired in scandal.

Another merger happened this week - the rival to the NYSE, NASDAQ (ticker NDAQ) merged with Instinet, an ECN that trades stocks electronically. While the NYSE / AX merger was about the old merging with the new, the NASDAQ merger was more about consolidation of two competitors into a single more profitable entity. Here is a link to an article about both of these events.

I dont' know exactly what prompted these 2 events to happen in the last week - I think it is a lot of items converging at once, from scandal at the NYSE to regulation changes at the SEC to the fact that everyone realized that something different had to happen ultimately with the NYSE's model.

No one knows what this will mean for investors. Investors want good prices on trades and fast execution. The "specialists" at the NYSE said that their model got investors better prices, but no one argued that electronic trading meant faster execution of trades.

Posted by Hello

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