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More exchanges eye links
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July 13, 1998: 3:58 p.m. ET
NYSE's Grasso confirms strategic talks; CBOE, Pacific Exchange also talking
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NEW YORK (CNNfn) - The accelerating pace of global consolidation in the financial industry has led even the nation's largest stock exchange to step up its efforts on joining forces.
Speaking Monday in London at a meeting of the British and American Chambers of Commerce, New York Stock Exchange Chairman and Chief Executive Richard Grasso said the Big Board is in talks with unnamed potential strategic partners.
Meanwhile, the Chicago Board Options Exchange and the Pacific Exchange are in discussions to merge their operations, creating a bourse that would control two-thirds of the nation's options trading.
The developments underscore the importance that electronic-based trading has played on the changing industry landscape. Today, many floor brokerage firms still use so-called "runner" clerks to physically bring orders to the trading pits and match their trades by hand.
Further bringing the issue to the industry's forefront is the expansion of electronic trading outlets such as E*Trade Group Inc. and AmeriTrade Holding Corp.
"The member firms are driving this (consolidation) in terms of cutting costs down," said Leslie Quick III, president of U.S. Clearing Corp."This Internet-electronic trading has forced us to do that.
The latest wave of negotiations comes amid consolidations that include the merger of the National Association of Securities Dealers (NASD) with the American Stock Exchange and the Philadelphia Stock Exchange (PHLX).
Also, the NASD has confirmed talks with Deutsche Boerse, the German stock exchange. The London Stock Exchange last week announced a link with Deutsche Boerse as well, a proposed first step toward a single European market for blue chip stocks.
"I think many exchanges are talking at the moment because we are at a situation where the entire landscape is changing," a spokesman for the Deutsche Boerse said.
The CBOE's discussions with the Pacific Exchange are expected to result in a bid within two weeks. The Pacific and Chicago exchanges have held at least two conference calls in recent weeks to discuss partnering, and have estimated the initial cost savings at $30 million over the coming two or three years. News of the talks was first reported by CBS MarketWatch.
-- from staff and wire reports
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