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Economic Data (USA)

Tuesday, December 06, 2005

NYSE Deal To Purchase Archipelago Is Approved By NYSE Members (Seatholders)

It's the end of an era.

Today, NYSE members voted and approved the purchase of Chicago-based Archipelago Holdings. The two companies are now set to merge and become the for-profit and publicly traded "NYSE Group" (The NYSE has been a not-for-profit organization since its incorporation back in 1971.) The only hurdle left in this deal is approval by the Securities and Exchange Commission (SEC).

This is truly the end of an era, as trading within the NYSE Group will soon be all electronic, and the NYSE membership system of ownership will change for the first time since the NYSE's beginnings back in 1792. Seats are gone; current NYSE seatholders will get stock in the newly formed NYSE Group, and cash.

Current NYSE seatholders will soon enjoy a far more efficient system for trading stocks as NYSE Group shareholders; trading stocks electronically will help the NYSE Group to compete effectively with the NASDAQ Stock Market; the NASDAQ Stock Market is currently the largest, US-based electronic stock market, and has always been electronic. NYSE Group owners will also be able to trade in stock options and derivatives; furthermore, NYSE Group shareholders will have the power to trade in stocks that are listed on the NASDAQ Stock Market. The NASDAQ Stock Market will be the newly formed NYSE Group's main competitor.

If you are interested in getting a slice of the NYSE Group pie, don't be surprised if the asking price for NYSE Group stock seems high when trading in the stock begins. You can be sure that investors around the world will be very eager to acquire a stake in a stock market that has been a very exclusive club for over 200 years.

What's going to happen to the open-outcry system of trading @ the NYSE you ask? Answer: it will still be there. Many of those traders you see on the floor have already moved from scribbling on paper to using small, hand-held computers to execute their trades. In the future, the system will be simply go from being semi-electronic to fully electronic.

The NYSE Group will trade under the "NYX" stock symbol after all is said and done.

Here's a snippet from a press release that was issued today:

"More than 95 percent of New York Stock Exchange (NYSE) Members who cast ballots have approved the Exchange's proposed merger with Archipelago Holdings, Inc. (PCX: AX), whose shareholders earlier today voted in favor of the transaction. More than 90 percent of NYSE's 1,366 Members participated in the vote. Final results of the NYSE Member referendum will be released on Wednesday, Dec. 7, following vote certification by inspector of elections IVS Associates, Inc.

'This is a truly historic day for the New York Stock Exchange and an event of great importance for our future and that of our customers and America's capital markets,' said NYSE CEO John A. Thain. 'In approving the merger with Archipelago, our Members have embraced an initiative that enables the NYSE to maintain our leadership position and to advance our goal of becoming a global multi-product marketplace. This transaction gives the NYSE a strong platform for future growth, value creation, and competitive positioning on a global basis.'

The NYSE/Archipelago merger will represent the largest-ever among securities exchanges and will combine the world's leading cash equities market with the first totally open, fully electronic exchange. As merged enterprises, the NYSE and Archipelago will become wholly owned subsidiaries of NYSE Group Inc., a newly formed, for-profit Delaware corporation that will be a publicly traded company. The NYSE and Archipelago announced the merger on April 20, 2005. The transaction is expected to close in early 2006."

In related news, The folks @ NASDAQ will soon close a deal to purchase the Instinet Trading Group, Inc., for $1.88 billion.

Stay tuned for more NYSE and NYSE Group news.

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