NYSE Euronext to buy AMEX
It's a small deal as these thinks go ($260 million), but the announced acquisition of the American Stock Exchange (AMEX) by international exchange New York Stock Exchange-Euronext is just another, inexorable step in the consolidation of the securities exchange industry worldwide.
Amex is 165 years old, and at one time was a major competitor to the NYSE and Nasdaq. While few major companies now list their stocks on the AMEX, its specialty in recent years has been in trading stock options, and according to Bloomberg News, the move will make NYSE-Euronext the #3 player in the $1.3 trillion options market (after Chicago Board Options Exchange and the International Securities Exchange), Amex is the leader in a specialized field called exchange traded funds (ETFs), securities which track a financial index, such as the Standard & Poor 500. That market as a whole is worth $622 billion and has been growing fast.
Amex is behind the times in terms of technology, so the NYSE (which acquired exchange technology provider Archipelago a few years ago) should be able to make it more efficient. NYSE Euronext just announced the purchase of company Wombat Financial Software, for $200 million. It makes high-speed market data software.
The consolidation of stock markets globally and in the US continues on apace, Nasdaq recently announced its acquisition of two other venerable US exchanges, the Philadelphia Stock Exchange ($652 million) and the Boston Stock Exchange ($61 million). Last summer, the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade created a new goliath, the CME/Chicago Board of Trade Company. And last month, German-based Eurex announced the completion of its acquisition of US-based ISE.
Last summer Nasdaq gave up on its attempt to buy the London Stock Exchange, selling it share in the LSE to Borse Dubai, who in turn agreed not to contest Nasdaq's bid to buy Scandinavian exchange OMX, a $3.7 billion deal which is still pending. Plus there was the NYSE Euronext merger in 2006.
My position is that these are not good developments. As we have seen in the US now with an oligopoly of bond ratings agency and bond insurers and the mortgage crisis, powerful and arrogant companies with their hands on large cash flows can make disastrous errors that have deep consequences. Having the world's economy in the hands of a few exchanges including an export of US "financial creativity" bodes no good.
6:53:27 PM 
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