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Who gains from 'Am-daq'?
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March 12, 1998: 10:50 a.m. ET
Amex, Nasdaq union would combine two 'radically different exchanges'
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NEW YORK (CNNfn) - Two of Wall Street's own, the Nasdaq market and American Stock Exchange, are talking about joining forces.
Maria Ramirez, chief executive and president of Maria Fiorini Ramirez, Inc., joined anchors Stuart Varney and Deborah Marchini on CNNfn's "Business Day," to discuss the potentially large impact of such a David and Goliath marriage:
MARCHINI: Good morning.
MARIA RAMIREZ, CEO & PRESIDENT, MARIA FIORINI RAMIREZ INC.: A pleasure, good morning.
VARNEY: I've got some brief questions. Number one, if I own stock on either exchange is there any risk to me and my stock with this merger?
RAMIREZ: I don't think so. I really don't think it has much of an impact in terms of where your stock is and what exchange it's traded at.
VARNEY: If I own stock on the American Stock Exchange is there going to be a difference in how much it costs in the future to trade it?
RAMIREZ: I doubt there's going to be really much of a change. ... Competition for execution is getting so stiff that I think that if anything prices will probably come down instead of going up.
VARNEY: Does this mark the gradual end of floor-based trading systems and a move towards screen-based electronic systems?
RAMIREZ: You know, I think that we've been going that direction for awhile. If you look at some of the new exchanges in different parts of the world, they didn't even start with a trading system that was floor-based, it was really screen-based.
So, I think that it emphasizes more that direction that we'll being going into and trading on the Internet. That kind of stuff I think is really what they're responding to.
MARCHINI: If the floor-based system is fading away why does Nasdaq want to buy a floor-based market?
RAMIREZ: Well, I think that you have a floor-based market in the AMEX, and you know at Nasdaq that's not the case; and I think that merging the resources of the two certainly is going to give some others a run for the money.
MARCHINI: The New York Stock Exchange principally of course.
RAMIREZ: Exactly. I think -- certainly, I think -- that there is really a lot of competition in the U.S. by the smaller exchanges and also exchanges overseas. They get more of the business traded either on their screens or on their floor.
So, I think this makes the two entities that separately may not have been as strong as they could be on their own (better equipped) to compete with other exchanges.
MARCHINI: How will it help the Nasdaq compete? Specifically, what do you think the Nasdaq will get out of it in terms of new business?
RAMIREZ: Well, generally when you combine forces not only can you grow your business domestically but also in other parts of the world. I think (new business is going to come from) growth in the companies listing ...
MARCHINI: Most of the international companies that trade here now are listed on the New York Stock Exchange.
RAMIREZ: And I think that if you have those two entities combined -- Nasdaq and the American Stock Exchange combined -- some of that business could be much better for them also.
VARNEY: So, this is really competition for listing of companies and at the moment the growth in listings comes from overseas and the New York Stock Exchange is winning and the Nasdaq wants its piece?
RAMIREZ: Well, I think that everybody wants a piece of the action. I think that there are many businesses and many products that everybody's competing for and I do think that, you know, in the spirit of having bigger and better organization, whether it's in pharmaceuticals, whether it's in banking or retail or all kinds of industries, I think the exchanges really don't escape that. It's the same thing in that business also.
MARCHINI: The Nasdaq's image was tarnished a couple years back when the Securities and Exchange Commission started investigating it for price fixing. Is there anything in this agreement that will help improve Nasdaq's tarnished image?
RAMIREZ: Well, I think that when they had those problems they created a lot of changes and cleaned up and certainly improved the image.
I think that the image of the two combined and the strength of the two combined is going to make it a much more solid institution if it does go through than the two of them apart in the world that we live in with the resources that you need to compete in.
VARNEY: Last quick question, where does this leave the smaller exchanges dotted around the country -- the Pacific Stock Exchange, Boston, Philadelphia?
RAMIREZ: You know, we are constantly moving towards 24-hour trading. Some of the exchanges in other parts of the country have had longer hours, different hours, and have been getting a marketshare.
I think that the two entities combined, the strength that they have, makes it more difficult for the other exchanges that have been trying to compete and get some business to grow at the same rate. But I think the direction that we're going is really towards less fees, more competition for the business. I think ultimately, the small investor is going to benefit from it.
VARNEY: Maria Ramirez, we thank you again for joining us this morning.
RAMIREZ: Always a pleasure. Thank you.
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