Losing biz to cheaper rivals, NYSE saw it needed partner

While execs were finishing a deal to sell the New York Stock Exchange to a German rival, the NYSE was locked in a separate, smaller battle with three dozen competitors. The prize was the right to deliver 400 shares of Coca-Cola stock.About 8 billion shares trade every day in the U.S., so this sale seems hardly worth mentioning, save for the telling outcome: The NYSE lost.The New York exchange is losing a lot these days. The icon of American capitalism hopes that combining with another exchange will give it heft to reverse its fallen fortunes. But it won't be easy.Competition is so keen to handle stock orders now that the difference between winning and losing frequently comes down to pennies - in the case of the Coke trade, a few hundredths of a penny.For decades, if you wanted to buy Coke stock, your request went to a middleman in a trader's jacket on the floor of the NYSE in lower Manhattan. He'd yell and wave his arms until he found a seller. Now those middlemen are nearly gone, replaced by the hum of computers in office parks across the country.That helps explain why NYSE Euronext, the exchange's parent company, said Tuesday it will be acquired by Germany's Deutsche Boerse to form the world's largest stock exchange operator. The deal would create a powerhouse in options and futures trading, which is more profitable than bringing buyers and sellers of stocks together.The fight over fractions of pennies is the result of four decades of regulatory changes and innovation. The NYSE has moved to adapt, but some 50 exchanges and trading venues now vie for its customers. Join the Conversation: Continue Reading

Renovation poises NYSE to be New York’s new black tie party destination

What do you do when a cathedral of capitalism becomes antiquated? You turn it into The The exchange, where traders have nervously watched tickers and shouted orders for more than 100 years, is already available for some events. It wants to expand to 1,000 a year, double the number from three years ago. Think black tie, not Black Monday. "Planners are always looking for something that's different and unique, and there's only one stock exchange," said In addition to the trading floor, the exchange rents out updated meeting spaces to companies and charities. They include vaulted-ceiling dining rooms and a lounge with gilt-edged walls that used to be a club for stock traders. Company officials wouldn't say what they were spending on the renovations, which are expected to be finished by the end of next year. It's a renovation borne out of necessity. Hosting meetings is a small part of the company's overall profits, but shows how far the building has come from its days as the center of the daily churn global capitalism. Since the last renovation of the building in 1995, the business model of the stock exchange has changed drastically. Fewer traders than ever actually work on the floor. "Now, I can do more with my hand-held device than I ever could back then," he says, swinging his arms wide on the trading floor. No other trader was within 10 feet of him. There are a couple of strategic reasons for the renovation, which comes while the company's future is uncertain. NYSE Euronext gets more and more of its profits from companies that list their shares on the exchange or rent out its rooms. The company brought in $3.1 billion in revenue from trading last year, down from $3.5 billion two years ago and the second year of decline. That figure includes both the conventional trading of stocks but also the far more lucrative business of trading more exotic financial instruments like options and futures contracts. At the same time its stock listings Continue Reading

Financial reform on skids? NYSE bigwig Duncan Niederauer says there’s ‘less appetite for change’

The appetite and sense of urgency for world financial reform have waned as markets have rebounded and the world economy has shown signs of recovering, the head of exchange operator NYSE Euronext (NYX.N) (NYX.PA) said on Thursday.Duncan Niederauer told Reuters the emotion surrounding the overhaul of banks and capital markets has also faded. He said a calmer approach could produce more rational legislation as lawmakers and regulators globally move to avoid a repeat of the financial crisis.Futures Industry Association's annual conference here.United States, the European Union and others continue to debate and craft new rules, some of which face stiff industry resistance. U.S. Sen. Christopher Dodd, chairman of the Banking Committee, said earlier on Thursday he would present his own version of a financial reform bill after compromise talks with Republicans collapsed.European Commission is expected to publish a draft law on derivatives clearing by July.Goldman Sachs Group Inc (GS.N) head trader who has run the Big Board parent since late 2007. Join the Conversation: Continue Reading

Broker glommed $500G from malpractice awards, NYSE sez

A heartless stockbroker became a Morgan Stanley rainmaker by pilfering more than $500,000 in trumped-up trading fees from the accounts of injured kids. Charles Winitch robbed seven medical malpractice victims, ages 10 to 18, by collecting huge commissions off "guardian accounts" designed to maximize money earnings and manage health care for the young victims, New York Stock Exchange regulators said Wednesday. The NYSE banned Winitch for five years after rejecting his appeal in the case. Winitch himself pocketed $105,834 out of the $537,153 in commissions he generated by preying on "particularly vulnerable customers ... targeted because they were unlikely to notice the unsuitable trading," an NYSE hearing board ruled. Several of the malpractice victims had single, unemployed mothers with zero investment experience, according to filings in the case. The commissions were paid out of the guardian accounts. In one instance, the 49-year-old Winitch - who lived in well-to-do Scarsdale, Westchester County - earned commissions of $95,802 on unethical trades using a 12-year-old girl's medical malpractice settlement. The girl's gains on the deals: $10,389. Another 12-year-old victim's account gained $1,652, while commissions totaled $29,986. A 10-year-old's account gained $245 while generating $22,709 in commissions. And a 13-year-old's account lost $120 while paying $9,149 in commissions. Winitch's huge profit on his 2004 deals earned him a vacation at a five-star resort, a jacket with the Morgan Stanley crest and a plaque as a member of its exclusive "Chairman's Club." He was fired in August 2005 when the charges against him became public. Winitch had joined Morgan Stanley in 1998. NYSE regulators ruled he made dozens of "unsuitable" short-term trades that generated the large commissions and had failed to get written approval from his customers. Morgan Stanley issued a statement saying it had reimbursed the clients affected by the trading Continue Reading

NYSE taking over Amex

NYSE Euronext, owner of seven securities markets in Europe and the U.S., will pay $260 million for the American Stock Exchange to bolster its fast-growing options and fund trading business.Members of the 165-year-old Amex will receive shares of NYSE Euronext as well as proceeds of the sale of the Amex building in Manhattan, the exchanges said.The deal would make the NYSE Euronext the third-largest in the $1.3 trillion U.S. options market and No. 1 in exchange-traded funds, whose assets doubled in the past year to $622 billion.The NYSE is headed by Duncan Niederauer, who took the helm Dec. 1 after the departure of John Thain to Merrill Lynch. Join the Conversation: Continue Reading

NYSE head John Thain tapped to lead Merrill Lynch

Merrill Lynch & Co. said Wednesday it has tapped New York Stock Exchange head John Thain to lead the world's largest brokerage through the unfolding credit market turmoil that threatens Wall Street's biggest investment houses. Thain, 52, has been selected to become Merrill's next chairman and chief executive officer. His appointment comes just two weeks after the ouster of Stan O'Neal as Merrill reported a $2.24 billion loss during the third quarter, the largest in its 93-year history. The New York Stock Exchange said Wednesday that it named Duncan Niederauer chief executive. Niederauer, 48, joined the NYSE in April after serving as co-head of equities trading at Goldman Sachs. Thain's first day as Merrill's new chief is Dec. 1. "I am excited and honored to have the opportunity to lead such an outstanding organization," Thain said in a statement. "I am certain that together we can continue to grow Merrill's global business and add value to our customers and our shareholders." Thain is no stranger to the investment world. He's credited with remaking the NYSE into the world's first truly global exchange. He started out on the bond desk at Goldman Sachs Group Inc. and left the firm as its chief operating officer. Many say his reputation as a consensus builder is exactly what Merrill Lynch needs now. O'Neal, Merrill's former CEO, was not well liked by its army of some 16,000 brokers, and lost their confidence after the company recorded the third-quarter loss. Alberto Cribiore, Merrill Lynch's interim non-executive chairman who headed a search committee to find a new CEO, said Thain is "the right person to become the new chairman and CEO." Merrill Lynch ratcheted up a huge loss during the third quarter because of investments in subprime mortgages and other risky types of debt. It joined dozens of other major financial institutions who are getting squeezed as investors steer away from riskier securities, causing credit markets to tighten Continue Reading

Former NYSE chief Dick Grasso will get his money

Dick Grasso's mega-millions payday has finally arrived. The former chief of the New York Stock Exchange Tuesday emerged victorious in his long-running battle with the state after an appeals court ruled that Grasso's nearly $190 million compensation package is off-limits. "From the get-go, there was never anything improper," Grasso told CNBC. The clash dated back to 2004, when then-Attorney General Eliot Spitzer sued him over the NYSE board's massive payout to the high school dropout from Queens. In a decision made public yesterday, the Appellate Division declared that the state lacked the authority to keep the case going since the NYSE became a for-profit business in 2006. "It's important when you believe in the principle of integrity, and running your life and business honestly, that you never capitulate," said Grasso, 61, who ran the exchange for eight years. "And that was my basic philosophy." A spokesman for Attorney General Andrew Cuomo conceded that the court's 3-to-1 ruling - which overturned a judge's decision ordering Grasso to repay more than $100 million - ends the case. "We have reviewed the court's opinion and determined that an appeal would not be warranted," said Alex Detrick, a Cuomo spokesman. "Thus, for all intents and purposes, the Grasso case is over." Grasso's 2003 departure from the NYSE set off an uproar when his $187.5 million compensation package, including a lavish retirement plan, turned him into the face of Wall Street greed. It also made him a sizable target for Spitzer, who cast his crusade against Grasso and other Wall Street honchos as one against a "gross abuse of power." Spitzer resigned as governor earlier this year after getting tripped up by a call-girl ring. The appeals court decision also threw out a claim against Ken Langone, a Home Depot founder who formerly led the NYSE's compensation panel. Spitzer had accused Langone of misleading the NYSE board on Grasso's pay. Langone told Bloomberg News Continue Reading

Amex takeover seen by rival NYSE

The New York Stock Exchange's owner is in talks to acquire longtime rival American Stock Exchange.The privately held Amex could fetch as much as $350 million, according to a Wall Street Journal report that cited people familiar with the matter. The report said a deal could emerge as soon as this month.Officials from NYSE Euronext declined to comment. Amex didn't respond to a request for comment.A deal would mark the first major move by newly installed NYSE Euronext CEO Duncan Niederauer. He replaced John Thain, who took the top job at Merrill Lynch in December. Join the Conversation: Continue Reading

Mayor part of NYSE’s China debut

BEIJING - The New York Stock Exchange is set to open its first office in China Tuesday, with Mayor Bloomberg and Treasury Secretary Henry Paulson joining the occasion, as the Big Board boosts its profile in the crucial Chinese economy."We felt it was appropriate to be in the capital," NYSE spokesman Rich Adamonis said, adding that 49 Chinese companies are listed on the exchange.The NYSE move is aimed partly at maintaining New York's status as the world's financial capital amid intense competition. The London Stock Exchange, which has been operating in Hong Kong since 2004, plans to open an office in Beijing early next year.Bloomberg is spending three days in China, including a trip to Shanghai, where the city opened a tourism office earlier this year, before heading to Indonesia for a UN  conference on global warming.     Join the Conversation: Continue Reading

Appeals court reinstates part of suit against NYSE

A federal appeals court has reinstated part of a lawsuit accusing the New York Stock Exchange of misconduct in its dealings with the seven trading firms that process stock transactions.The ruling today by the 2nd U.S. Circuit Court of Appeals will allow a group of market investors to argue that the NYSE made misleading statements about the integrity of its trading system and the so-called specialist firms that make buying and selling stock possible.In a victory for the exchange, however, the appeals court also upheld a lower court ruling tossing out claims that it had failed to properly regulate the traders. The court said the NYSE enjoyed some legal immunity on regulatory matters because it was performing duties delegated to it by the federal Securities and Exchange Commission.The judges returned the case to a lower court for more discussion on whether the NYSE would remain as a defendant.The complaint was prompted by a scandal in which several specialists were accused of using their unique powers and access to inside information to make millions of dollars trading stocks they supervised.The SEC penalized the firms more than $240 million in 2005. A federal grand jury indicted several traders on criminal charges, but some of those cases were later dropped. Others are still pending.The indicted traders worked for firms including Bear Wagner Specialists LLC, Fleet Specialist Inc., LaBranche & Co. LLC, Spear, Leeds & Kellogg Specialists LLC and Van der Moolen Specialists USA LLC.The civil lawsuit against the NYSE was brought by plaintiffs including the California Public Employees' Retirement System.An NYSE spokesman declined to comment on the ruling. Join the Conversation: Continue Reading