NYSE Finds Romance In Germany; Will It Work? The company that owns Germany's largest stock market is talking merger with the owner of the New York Stock Exchange. Changes in technology have diminished the NYSE's role in the capital markets. Experts say a merger could help keep it relevant.
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NYSE Finds Romance In Germany; Will It Work?

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NYSE Finds Romance In Germany; Will It Work?

NYSE Finds Romance In Germany; Will It Work?

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MELISSA BLOCK, Host:

As NPR's Jim Zarroli reports, the deal is being driven by changes in technology that have diminished New York's role in the capital markets.

JIM ZARROLI: But money manager Michael Holland says they've had a huge impact on traditional stock exchanges like the NYSE.

MICHAEL HOLLAND: The nature of the securities business - the stock markets - the business has changed so dramatically over the past 10 and 20 years. What used to be a very, very profitable business is now razor-thin margin business.

ZARROLI: Arthur Levitt, former chairman of the Securities and Exchange Commission, says this has meant a declining role for the exchange and for U.S. capital markets as a whole.

ARTHUR LEVITT: We've always accepted the notion that the United States was the premiere economic market in the world and that anyone who sought a listing had to list in New York because we were the premiere capital market. That, obviously, is no longer the case.

ZARROLI: The merger with Deutsche Boerse is an attempt to respond to these threats, says Michael Holland.

HOLLAND: If they get together, it will be the largest stock exchange/bourse in the world and should have the most efficient and lowest cost production of what they do.

ZARROLI: Charles Jones, professor of finance at Columbia University, says that may be a little hard for some Americans to accept.

CHARLES JONES: There's a little bit of nationalism that may come into this. It's giving up a little bit of sovereignty to have your stock exchange merge with another national stock exchange.

ZARROLI: Former SEC chairman Levitt says in the long run, they may have no choice.

LEVITT: The politicians will fulminate about local sovereignty, but we no longer can take the economic supremacy of the United States for granted. This is a global market, and we need global exchanges.

ZARROLI: But in recent years, most, including the New York Stock Exchange, have become for-profit companies that have to answer to their shareholders. And Levitt says they can't afford to stand still.

LEVITT: I think in the absence of this, I would worry about the future of the New York Stock Exchange because somebody on both sides of the water will be merging and that could make the New York Stock Exchange largely irrelevant if they don't stay on top of it.

ZARROLI: Jim Zarroli, NPR News.

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