NYSE/NASD Possible Merger
quote.bloomberg.com
Top Financial News
Fri, 03 Mar 2000, 10:14am EST
New York Stock Exchange and NASD Discussed a Possible Merger, Person Says
By Neil Roland
NYSE, NASD Held Merger Talks, Person Familiar Says (Update3)
(Updating to include background, comments from SEC, NASD, NYSE.)
New York, March 3 (Bloomberg) -- The New York Stock Exchange
and the National Association of Securities Dealers have discussed
merging as they face increasing competition from electronic
markets, a person familiar with the talks said.
The talks, reported by the Wall Street Journal, are not
currently ongoing and there are no immediate plans to resume
discussions, the person said.
The proposal was detailed in a document describing the NASD's
plan to sell shares in its Nasdaq Stock Market and presented to
the board by Chairman Frank Zarb in a telephone conference call
Tuesday, according to the person.
Securities and Exchange Commission Chairman Arthur Levitt has
also participated in the talks between Zarb and NYSE Chairman
Richard Grasso, the person said.
Spokesmen at the NYSE and NASD said there are no current
talks to merge. They declined to say what if any talks had been
held. SEC spokesman Chris Ullman declined to comment.
Levitt, who has been spearheading a drive to reduce
fragmentation among the U.S. stock markets, which include three
national exchanges, six regional exchanges and nine electronic
trading networks, met with Grasso and Zarb in the New York office
of the SEC on Tuesday.
That meeting followed congressional hearings in New York in
which the chief executives of Wall Street firms, including Merrill
Lynch & Co. and Goldman Sachs Group Inc., told the Senate Banking
Committee that linking U.S. stock markets into a central exchange
would lower the costs of buying and selling securities.
The NYSE and Nasdaq opposed the idea of creating one U.S.
equity market. A central market could hurt the business of the
specialists and marketmakers that handle trades on the NYSE and
Nasdaq, respectively.
Competition
Both the Big Board and Nasdaq, the largest and second largest
U.S. stock markets, respectively, face growing competition from
low-cost electronic markets, such as Reuters Group Plc's Instinet
Corp., that automatically match buyers and sellers. The growth of
those electronic markets has caused trading to become more
fragmented, the Wall Street firms that testified before the Senate
committee said.
Unless the securities industry moves to allieviate
fragmentation of the stock market, Europe may eventually overtake
the U.S. as the most important market, said chairmen of Morgan
Stanley Dean Witter & Co., Merrill Lynch and Goldman.
``U.S. markets are already losing business to foreign markets
and will lose even more business in the future unless the U.S.
markets become more competitive in terms of costs and
efficiency,' said Morgan Stanley Dean Witter & Co. Chairman anc
Chief Executive Philip Purcell at the hearings, held at SEC's
offices at 7 World Trade Center in lower Manhattan.
Big Board chairman Richard Grasso testified at the same
meeting that he opposed a central stock market because ``a
monolithic structure would, in my opinion, stifle competition and
innovation and perhaps cause alternative systems to relocate off
shore.'
The hearing, chaired by Texas Republican Senator Phil Gramm,
bared for the first time some of the sharp differences within the
securities industry over Levitt's effort to provoke consideration
of a central market.
Charles Schwab, chairman of the online brokerage that bears
his name, broke with Merrill, Goldman, Morgan Stanley and Credit
Suisse First Boston, arguing that individual investors would lose
the benefits of innovation and competition under a central market.
The SEC's Levitt last week called for comment on ways to
central trading. The commission will review comment letters before
deciding whether to issue a more specific rule proposal that will
seek a second round of public comments. The five commissioners
would then decide whether to adopt the rule. |
