New York Stock Exchange Puts Out Stock in Itself
STEVE INSKEEP, host:
The business news starts with a change at the New York Stock Exchange.
(Soundbite of music)
INSKEEP: That stock exchange was a not-for-profit exchange until yesterday. For the first time, investors could also buy shares in the exchange itself. NPR's Jim Zarroli examines how things went with he new public company who went that is trading under the ticker symbol NYX.
JIM ZARROLI reporting:
In a ceremonial move, the first shares in New York stock exchange group were sold to company chairman Marshall Carter and John Thane, the chief executive. Thane is the driving force behind this transition and the way the exchange operates. First, the exchange merged with electronic trading firm Archipelago Holdings. Then yesterday, it formally became a for-profit company. Investors reacted with enthusiasm. By the end of the day, the shares in the company were 25 percent higher than where they started.
In an interview on CNBC, Thane said a high share price would help the company in the years ahead.
Mr. JOHN THANE (Chief Executive, New York Stock Exchange Group): And that's really one of the reasons why we needed to do this transaction. We needed that public currency if we're going to compete in a global basis. As markets start to consolidate, we need that currency.
ZARROLI: The changes that took place yesterday were widely called historic. The four of the exchange's member firms were also its owners. Now, the exchange has to answer to shareholders, who will put pressure on the organization to make more money. Ben Steel watches the markets at the Council on Foreign Relations.
Mr. BEN STEEL (Council on Foreign Relations): And all the evidence of the past 15 years or so really shows us that electronic trading is much more cost effective for investors, and makes more money for exchanges.
ZARROLI: Steel says that means the exchange will have to expedite its efforts to move away from the floor-based trading system that is so familiar to TV viewers. That's where the purchase of the electronic trading system Archipelago, this week, comes in. These changes aren't popular with everyone, especially with the floor brokers and other employees who would lose out if less floor-based trading takes place. As the new company began trading yesterday, there were cheers from the floor, but also some booing.
Jim Zarroli, NPR News, New York.