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Nasdaq, Amex talk merger
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March 12, 1998: 11:29 a.m. ET
The electronic exchange may be on verge of taking over venerable 'Curb'
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NEW YORK (CNNfn) - The Big Board may be about to get a Big Rival.
The Nasdaq Stock Market, the electronic repository for Wall Street's hottest technology shares, is discussing a possible merger with the American Stock exchange.
A union between the two would effectively end the Amex's 87-year-old history as a "Curb" exchange for major stocks along lower Manhattan's Broad Street. It could also signal a new, fiercer phase in the global contest among exchanges to lure companies to their rosters.
Amex is the nation's third-largest independent exchange. Yet, it has been eclipsed in recent years by the 27-year-old Nasdaq, a magnet for high-tech bellwethers who consider a listing on its roster as a rite of corporate passage.
With more than 5,400 companies in its electronic pantheon, the Nasdaq today has a market capitalization of some $2 trillion -- 10 times the value of Amex's much smaller listing of about 770 companies.
Both exchanges are eclipsed by the New York Stock Exchange, with some $9 trillion in market capitalization, including the 30 heavyweights that compose the Dow Jones industrial average.
Wall Street observers began Thursday to assess how much of a threat a Nasdaq/Amex combination would pose to the NYSE.
"I think that merging the resources of the two certainly is going to give some others a run for the money," said Maria Ramirez, the chief executive officer and president of Maria Fiorini Ramirez Inc.
A merger is by no means a done deal. NASD spokesman Michael Jones confirmed only that NASD "is exploring a number of initiatives." He said those initiatives included the possibility "of proposing a transaction which would seek to maximize the efficiencies of both the NASD and the Amex through a combination of both organizations."
But Jones stressed that NASD was simply "evaluating" the merger option.
Should an agreement be reached, Amex would become a subsidiary of the NASD. Amex would reportedly continue to have its own board. Any deal would require approval by Amex's 661 full members and 203 options-only members.
Beyond logistics, a merger would represent a melding of radically differing exchange cultures. The Amex subscribes to a rough-and-tumble trading tradition, in which floor brokers shout orders to buyers. The Nasdaq, by contrast, posts its orders on electronic listings screens, eliminating the need for a trading floor.
After a merger, according to reports, the Amex would preserve its auction-market driven trading. Yet the role of the brokers may be changed and diminished.
Ramirez said the merger talk simply mirrors what is happening in the corporate world as a whole. (205Kb WAV) or (206Kb AIFF).
She and others added that the merger could be the harbinger of a trend away from traditional floor-based trading. With exchanges cropping up around the globe as new market economies emerge, it is only natural, she and other suggested, that exchanges should seek the same efficiencies as the companies whose stocks they list. (143Kb WAV) or (143Kb AIFF).
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