Ticker wars: NYSE vs. Nasdaq
The nation's two leading exchanges are battling over a game of alphabet soup.
NEW YORK (CNNMoney.com) -- A few letters are sparking a big debate on Wall Street.
The Securities and Exchange Commission is expected to rule soon on a proposal that would allow the Nasdaq to display three-character tickers.
That's a big deal because investors generally associate a company with a ticker length of one to three letters as being listed on the NYSE or American Stock Exchange. International Business Machines (Charts, Fortune 500), for instance, trades on the NYSE under the ticker "IBM."
Nasdaq says the measure would allow companies to move between markets without having to change their ticker symbol.
"Tickers do matter. People get attached to their symbols," says William O'Brien, senior vice president of new listings at Nasdaq. "This proposal removes an artificial restraint on competition and gives customers better choice."
Allowing companies to "take their ticker with them" would drive competition among exchanges the way phone number portability increased competition among cell phone carriers, O'Brien says.
That isn't how the NYSE feels. The NYSE opposes the measure, saying it would result in investor confusion. It wants to keep the use of three-letter ticker symbols exclusive.
The NYSE declined to comment beyond public comments it has submitted on the matter.
The NYSE is also miffed that the Nasdaq went ahead and started using a three-character symbol before it even submitted its proposal to the SEC.
That happened in March, when Delta Financial Group (Charts) moved to the Nasdaq from the Amex and took its "DFC" ticker with it, making it the first company on the Nasdaq to use a three-letter ticker.
Revamping the ticker system could result in major confusion, since the different length of ticker symbols has always been a way for investors to differentiate between markets, says David Michayluk, a co-editor of the International Journal of Managerial Finance who studies stock exchanges.
But such a change is almost expected since the Nasdaq has become such a contender against the Big Board. Says Michayluk: "The U.S. market has become much more competitive and the differences have been eroding, so it is not surprising that this differentiation may also blur."
The Nasdaq started out as a listing market for mostly smaller technology companies. But its electronic trading platform has helped it rival the NYSE when it comes to stock listings and trading volume.
The SEC's decision on the Nasdaq proposal could come in the next week or so, and an approval could pave the way for broader changes to the ticker symbol system in the U.S.
The NYSE and Nasdaq have submitted separate plans on how tickers should be reserved and allocated in the U.S. These overarching plans extend beyond the issue of three-letter tickers.
Under the plan backed by the Nasdaq, tickers of all lengths would be available to all exchanges, while the NYSE wants to limit the use of one-to-three character symbols to markets that have traditionally used those symbols.
Both plans have been published by the agency and are currently available for public comment.