Rule changes to help NYSE floor brokers stay--exec
NEW YORK, June 20 (Reuters) - The already reduced trading floor of the New York Stock Exchange will shrink to half its size within a year, but recent rule changes and integration of multiple NYSE trading platforms will ensure its longevity, NYSE Euronext president Duncan Niederauer said.
"There is no doubt that with technology playing the role it plays now, the floor is destined to get smaller," Niederauer told a technology management conference at the Securities Industry and Financial Markets Association on Wednesday.
"I imagine we will have two trading rooms instead of three or four sometime later this year or early next year," he said.
The NYSE recently introduced a regulation change that allows brokers on its trading floor to handle non-NYSE-listed stocks.
The move levels the playing field for floor brokers, who could not previously access liquidity in other markets, including the Nasdaq Stock Market Inc. , and were losing trading share to competitors.
Niederauer said there is too much attention on NYSE Euronext's U.S. cash equities trading business, which is largely conducted on the floor.
"It's an important part of what we do," he said. But "I think it's important to know that the transactions that take place on the floor of the NYSE are a small fraction of NYSE Euronext revenues."
The equities business contributes 10 percent to NYSE Euronext's total revenue, while its derivatives business -- a key focus area for the company -- has the largest share at 22 percent, Niederauer said.
NYSE Euronext CEO John Thain recently told analysts the transatlantic exchange was looking at acquiring an options exchange to grow its U.S. derivatives business.
"Our goal is to keep diversifying," said Niederauer.
NYSE Euronext is a holding company created by the April merger of The NYSE Group Inc. and Euronext L.V., and currently operates six cash equities exchanges and six derivatives exchanges in five countries.
Asian exchanges will play an important role in the global consolidation of exchanges, he said. NYSE Euronext and the Tokyo Stock Exchange, which have an alliance, are "working on several things together" right now, Niederauer said.
Thain has previously said NYSE Euronext is looking to make an equity investment in the Tokyo Stock Exchange between now and 2009, when it is scheduled to go public.
Niederauer also said technological synergies are almost exclusively driving exchange consolidation.
"Ninety percent of NYSE and Euronext merger synergies are coming from technological integration," he said.
NYSE Euronext's goal is to merge the NYSE, NYSE Arca and Euronext trading platforms into a single platform, he said.
On Tuesday, the company announced that it would transfer the primary listings of exchange-traded funds to its NYSE Arca electronic platform from the NYSE by end-2007..
ETFs are similar to mutual funds but trade on exchanges like stocks, and derive their value from the price of the underlying securities.
The move, initiated by NYSE's specialist firms and ETF issuing companies, will provide traders with more liquidity, faster execution and other benefits.
Currently, ETFs trade on both NYSE and NYSE Arca, which the exchange acquired as part of its 2005 acquisition of Archipelago Holdings Inc.
NYSE floor brokers will also be able to trade ETFs because of the rule change that allows them to access different trading venues.
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