So which is the “incredible expanding exchange”? Nasdaq? Guess again.
According to the Chicago Stock Exchange, which last week urged members and staff to wear lapel buttons bearing that slogan, it’s the Chicago Stock Exchange.
In a memo dated Thursday to members and employees, chief executive Robert Forney took issue with this column’s reference to the exchange two days earlier as the “incredible shrinking marketplace.”
Forney didn’t dispute that the exchange’s head count has plunged as he parted with subsidiaries in recent years. Nor did he contest that his exchange’s share of trading volume has fallen sharply, vis-a-vis the dominant New York Stock Exchange and Nasdaq.
Still, he criticized the column for failing to mention the claim that the CHX, as it’s known, has become “the second-largest stock exchange in the United States.”
How’s that? The CHX traded 5.6 billion shares in 1997, while the NYSE traded 133.3 billion, or nearly 24 times more.
At the same time, the all-electronic Nasdaq traded 163.9 billion shares, or nearly 30 times more.
The CHX doesn’t consider Nasdaq an exchange, a spokeswoman explained.
True, CHX’s interpretation has a technical basis. But in the practical world of stock markets, Nasdaq is miles ahead.
And now Nasdaq’s parent is in the midst of merger negotiations with the American Stock Exchange–an exchange by any definition, one the CHX has surpassed in volume only in the first two months of this year. Some say a deal could trigger additional consolidation among CHX and other remaining regionals.
Perhaps if the merger comes to pass, then Chicago’s “incredible expanding” exchange will give Nasdaq its due.
Euro-vision: Fear is a great motivator, and the threat of computers replacing the traditional open-outcry trading method is propelling big moves in the futures industry.
The latest shocker came from the London International Financial Futures Exchange, which last week announced a timetable for expanding its electronic trading capacity.
In the same announcement, the LIFFE disclosed plans to forge “a different relationship between exchange share ownership and trading rights.” Its strategic plan will lead to “a revision of the corporate structure of the market,” LIFFE said.
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In short, LIFFE is talking about disconnecting the right to trade its products from ownership of its member seats.
To reach the broadest possible range of users, “You need to break that one-to-one relationship,” said LIFFE chief executive Daniel Hodson.
So would LIFFE members cash in their seats for shares and earn a dividend on exchange profits? Hodson wouldn’t speculate on details.
Still, the idea could catch on in Chicago. In the long run, exchanges may be better off as for-profit institutions responsible to shareholders.
A closer look: Government investigators are putting the planned merger of SunGard Data Systems and London-based Rolfe & Nolan under the microscope.
To the delight of futures trading firms that rely on one company or the other for back-office bookkeeping systems, the U.S. Justice Department is questioning whether the deal would be anti-competitive, SunGard confirmed. The United Kingdom’s Office of Fair Trade is investigating, too.
The firms say their prices for computer services will skyrocket if the merger occurs.
For its part, SunGard says it believes the worries are unfounded as well as short-sighted. As the industry gropes for efficiency, it needs a well-capitalized software company to lead the way, contended Doug Bergeron, president of SunGard Futures Systems, SunGard’s Chicago-based futures unit.
“The last thing this industry needs is a fragmented, undercapitalized basket of dissenting technology companies,” Bergeron said. “The type of investment this industry needs to get out of its funk is going to require . . . big, broad shoulders.”
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