NASD AND AMEX TO COMBINE TO CREATE A
GLOBAL MARKET OF MARKETS
- Synergies and Operating Efficiencies To Result In Lower
Costs To Investors -
- Over $100 Million To Be Committed To State-of-the-Art
Technology and Development -
New York, New York, March 18, 1998 - The National Association of
Securities Dealers (NASD) and the American Stock Exchange (AMEX)
jointly announced today that their respective governing Boards have
approved an agreement to merge the AMEX into the NASD family of
companies. The transaction is subject to a definitive agreement and the
approval of the AMEX membership. Structural and rule changes will
require SEC approval. This strategic combination creates a market
alliance unparalleled in technology, expertise, information and execution
to meet the needs of investors worldwide. The AMEX equity and options
markets will operate separately from The Nasdaq Stock Market and
Nasdaq International.
Frank G. Zarb, Chairman and Chief Executive Officer of NASD, and
Richard F. Syron, Chairman and Chief Executive Officer of AMEX, said,
"The combination of AMEX and NASD is a win for all concerned --
investors, member firms, and listed companies. Through this
combination, we will have the resources, state-of-the-art technologies
and management to achieve a more efficient, transparent and lower-cost
market structure.
"For investors, it will mean more efficient pricing, greater access to
specialist posts through a new, automated electronic limit order book,
faster execution and reduced transaction costs. For listed companies, it
will provide a unique choice between Nasdaq, a state-of-the-art
quote-driven market, and a newly enhanced AMEX, featuring a
state-of-the-art order-driven structure. For member firms, it will produce
substantial cost savings and a more level playing field by leveraging
NASD's technology and integrating regulatory functions."
"Building on the strengths of both organizations, we will jointly develop a
fully automated electronic limit order facility for equities which will be the
first of its kind to be operated in the United States by a primary market.
The new facility, which will operate on the NASD's extensive network,
will permit electronic routing of customer orders directly from brokers
around the world to AMEX specialist posts in New York for immediate,
automatic execution. It will allow viewing of the AMEX specialist 'book'
above and below the quote, and for the first time will enable brokerage
firms to obtain real-time limit-order information for investors. No other
stock market in the United States is comparable."
"The NASD/AMEX combination will also enhance the growth potential of
AMEX's strong options business, the volume of which has increased 65
percent over the past two years. The combined NASD/AMEX global
position in equities and derivatives trading will further the worldwide
expansion of our member firms," Zarb and Syron added.
Under the terms of the agreement, the NASD will commit more than
$100 million over the next several years, primarily to install
state-of-the-art technology to ensure that AMEX and The Nasdaq Stock
Market meet the needs of a globalized capital markets system. The
combination of NASD and AMEX will create significant synergies for the
industry, including targeted cost savings of hundreds of millions of
dollars over a five-year period.
The combination of NASD and AMEX represents the first major step in
creating a "market of markets" to be built and operated on a global
network of computers connecting market participants around the world.
This combination capitalizes on the opportunities created by the
revolution in information technology that now makes possible stock
market alliances on a worldwide basis. It is a leading-edge transaction
for the securities industry, bringing together under one roof equity and
options markets and facilitating the delivery of price and quote
information for both markets through a common global network.
The transaction will be structured to be tax free to AMEX seatholders.
Regular AMEX seats will retain the right to trading, brokerage and
specialist activities. AMEX Option Principal Members will retain the right
to participate as registered options traders. The NASD will provide $30
million to be applied to a seat-stabilization program for Regular Amex
seatowners. All such funds not applied to the stabilization program will
be invested by the NASD in technology or facilities for the AMEX.
As part of the NASD family, AMEX will operate as an independent
subsidiary of the NASD with its own Board of Directors. The new AMEX
Board will consist of four industry directors, four staff representatives and
eight public representatives. The AMEX Board will designate four
members to serve on the twenty-seven member NASD parent Board.
The American Stock Exchange is the only primary marketplace in the
United States for both equities and derivative securities. The AMEX
trades more than 900 issues on its primary list. In the options market,
the AMEX trades options on 29 broad-based and sector indexes and
896 stocks and 103 Long-term Equity AnticiPation Securities (LEAPS).
In addition, the AMEX is a leader in listing warrants on foreign currencies
and indexes as well as hybrid instruments and other structured
products.
The National Association of Securities Dealers, Inc. is the largest
securities industry self-regulatory organization in the United States.
Through its subsidiaries, The Nasdaq Stock Market, Inc. and NASD
Regulation, Inc., the NASD designs, operates and regulates securities
markets and develops rules and regulations, provides a dispute
resolution forum and conducts regulatory reviews of member activities,
all for the benefit and protection of the investor.
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