NASD Close to Selling Amex, Amex CEO Sodano Says
Washington, Dec. 20 (Bloomberg) -- The National Association of Securities Dealers is close to selling the American Stock Exchange to a private equity firm, venture capital group or foreign stock exchange, Amex Chairman Sal Sodano said.
``We're right on target to completing this shortly after the end of the year,'' Sodano said in an interview. ``There are several parties who are incredibly interested in the Amex, and we're looking for the right strategic fit.''
Sodano declined to identify the potential buyers of the Amex, the third-largest U.S. stock market and second-largest options market, or state a purchase price. Chicago-based Madison Dearborn Partners, a private equity fund, has expressed interest in the Amex, the New York Post has reported. A Madison spokesman didn't respond to a request for comment.
The NASD, a self-policing brokers group, has been trying to sell the Nasdaq Stock Market, the second largest U.S. stock market, and the Amex so it can concentrate on regulation. The New York-based Amex has been struggling for years to compete with bigger rivals such as the New York Stock Exchange and more recently with electronic trading networks like Island ECN.
Any for-profit equity group that buys the Amex will probably invest money in the exchange, convert it to electronic trading, and streamline its governance, an analyst said.
``They'll then sell the Amex off to another exchange or electronic trading network after showing it can be made into a profitable franchise,'' said Benn Steil, a stock-exchange expert at the non-profit Council on Foreign Relations.
Many Issues
The purchaser will face a host of potential business, management, and regulatory issues because of the Amex's financial difficulties and the prospect of delays in getting Securities and Exchange Commission approval, said Georgetown University finance professor James Angel.
``If the NASD is willing to dump it cheap enough, maybe an investor might say, at this price, I can't go wrong,'' Angel said. From the Amex's standpoint, an acquisition by a for-profit company would give the exchange a more nimble decision-making structure, said Paul Liang, managing partner of PBL Partners, which owned six Amex seats until selling them last month. The Amex is made up largely of member trading firms.
``The Amex's membership structure is archaic and not functioning well,'' Liang said.
NASD spokeswoman Nancy Condon declined comment.
The most valuable parts of the Amex are its offerings of options and exchange-traded funds, which are tied to the value of various baskets of securities, Steil said. The Amex's 122 ETF's are linked to indexes such as the Standard & Poor's 500 and the Nasdaq-100 Index. It also list the stocks of mostly small and mid- sized companies.
Equity Options Trading
The Amex topped the Chicago Board Options Exchange, the largest U.S. options market, on 31 different occasions this year as the largest venue for equity options trading, Amex spokesman Robert Rendine said. Its share of the ETF market, though, has shrunk to 26 percent this year from 47 percent last year, largely because of Island's entry into ETF offerings, he said.
In 2000, the Amex announced plans to make an initial public offering of its own stock. Following the decline in the U.S. market for IPOs, the Amex's board in January formed an eight- member committee to examine alternatives, including a merger, sale and purchase by Amex management from the NASD.
NASD acquired Amex in 1998 in an attempt by then-NASD Chairman Frank Zarb to merge Nasdaq's electronic trading with Amex's floor-based auction market. |
