NYSE chief rejects competition claims
Financial Times
John Thain, chief executive of NYSE Euronext, has hit back at recent claims by a Goldman Sachs analyst that new US regulations will erode the transatlantic stock exchange group's market share and benefit its main US rival, the Nasdaq.
The new batch of rules, known as Regulation National Market System, is aimed at levelling the competitive field in the US equity market by requiring trades to be executed at the best price available anywhere.
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In an interview with the FT, Mr Thain said some requirements of the new rules would actually be helpful rather than harmful to NYSE Euronext.
"I don't think that Reg NMS poses any competitive issues for us because it says you have to send orders to the market with the best price and we have the best price 80 per cent of time," Mr Thain went on to note.
On Monday, NYSE Euronext's shares fell 5.5 per cent in New York trading after Joshua Carter, an analyst at Goldman, said that buying Nasdaq and selling NYSE Euronext would be a good way to bet on how Reg NMS – which will be fully implemented in July – will affect the industry.
Drafted in 2005, the regulation forces brokers on an exchange to check other market centres for better prices before executing a trade. The goal is to ensure that clients can buy stocks at the best price regardless of what exchange their broker trades on.
Mr Carter said that Nasdaq was faster and had better technology than NYSE Euronext, making it better suited to an industry under the new regulations.
Both exchanges also face competition from new centres of liquidity operated by investment banks and independent groups.
While Mr Thain admitted that the NYSE needs to be faster, he added that, for traders for whom speed was of the essence, the NYSE Arca electronic platform was available. "No one is faster than Arca," he said.
The increased focus on speed was being driven by computer-based traders, he said. "They care a great deal about speed," he added.
He said it was a misconception that it was the largest hedge funds who were largely responsible for heightened interest in faster trade cycles.
"Most of the largest hedge funds are most concerned about good execution and getting trades done without affecting the price," he said.
Mr Thain presides over the world's first transatlantic stock exchange following completion of the NYSE Group's merger with pan-European exchange group Euronext.
Earlier this week, NYSE Euronext relaunched its electronic US bond trading exchange to win business from privately negotiated, or over-the-counter, markets.
Additional reporting by Richard Beales
Copyright 2007 Financial Times |
