Nasdaq joins global competition for NYSE with bid

NEW YORK - Instead of fighting the NYSE, Nasdaq wants to own it.

Nasdaq OMX Group Inc. and another U.S.-based market, the IntercontinentalExchange Inc., submitted a joint $11.3 billion bid Friday for NYSE Euronext, the parent company of the New York Stock Exchange. The offer, which was expected, raises the possibility of a bidding war for the NYSE with Deutsche Boerse. NYSE agreed to a $10 billion deal with the German exchange operator in February.

The dueling bids for the NYSE show how intense the competition for trading in stocks, options and other investments has become. Though mergers between exchanges have little, if any, impact on small investors, they are a means for survival for these markets.


Technology has driven down the cost of trading to almost nothing. Newer, smaller and more high-tech companies such as the BATS Exchange and Direct Edge have emerged to give investors the opportunity to find the best price for a security in milliseconds. That has taken business away from institutions like the NYSE and Nasdaq.

"We're in the midst of a pretty fundamental reshaping of the way people trade stocks, bonds and derivatives," said Kenneth B. Marlin, managing partner at Marlin & Associates, a boutique investment bank that's done merger related work with exchanges. "This bid is a recognition that they are riding a powerful wave of change."

Moreover, stocks are becoming a smaller part of the trading business. Exchanges are making more of their money from options and the complex investments known as derviatives. In response, the world's major exchanges have been combining with one another. In February, the London Stock Exchange and the parent company of the Toronto Stock Exchange announced a $2.9 billion merger, and the Singapore Exchange and Australia's ASX revised its own $8.3 billion merger plan.

The NYSE is itself a combination of several exchanges including those in Paris, Brussels, Amsterdam and Lisbon. Nasdaq OMX owns exchanges in Scandinavia as well as the Nasdaq Stock market.

There is some irony in a Nasdaq bid for the NYSE - Nasdaq once expected to defeat the company that it now wants to own.

by Pallavi Gogoi Associated Press Apr. 2, 2011 12:00 AM




Nasdaq joins global competition for NYSE with bid