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On October 1, 2008, the American Stock Exchange was acquired by NYSE Euronext. The new name for the American Stock Exchange is “NYSE Alternext US LLC”.

Do you think this news is good, bad, or unimportant?

Please explain your vote in a reply to this message.

Before we can seriously consider the question “Is the acquisition of the American Stock Exchange by NYSE Euronext good news, bad news, or unimportant news?”, we should first answer the most relevant preliminary question “How many markets does NYSE Euronext now control?”

Moreover, given the recent acquisitions of the Prague Stock Exchange and the Ljubljana (Slovenia) Stock Exchange, we should look at the holdings of the Wiener Borse.

Finally, during my research, NASDAQ’s name was frequently mentioned as a “gobbler” of international stock exchanges.


NYSE Euronext holdings

American Stock Exchange
Amsterdam Stock Exchange (and Liffe derivatives market)
Brussels (Belgium) Stock Exchange (and Liffe derivatives market)
Chicago Board of Trade Metals Complex
Lisbon (Portugal) Stock Exchange (and Liffe derivatives market)
London Liffe derivatives market
NYSE
NYSE Arca (options trading; formerly Pacific Exchange)
Paris Stock Exchange (and Liffe derivatives market)

25% of the Doha (Qatar) Securities Market


Vienna Stock Exchange holdings

(manages) Bucharest (Romania) Stock Exchange
Budapest Stock Exchange
Ljubljana (Slovenia) Stock Exchange
Prague Stock Exchange
(manages) Zagreb (Croatia) Stock Exchange


NASDAQ OMX Group holdings

Copenhagen Stock Exchange
Helsinki Stock Exchange
Iceland Stock Exchange
NASDAQ
Riga (Latvia) Stock Exchange
Stockholm Stock Exchange
Tallinn (Estonia) Stock Exchange
Vilnius (Lithuania) Stock Exchange

33 1/3% interest in Dubai (United Arab Emirates) International Financial Exchange, or DIFX. NASDAQ intends to increase its stake to 67%.

Rumored to have an interest in acquiring the London Stock Exchange. (The London Stock Exchange, in turn, already owns the Milan (Italy) Stock Exchange.)


Interesting Notes

• NYSE Euronext is a for-profit corporation that trades on the New York Stock Exchange under the symbol “NYX”.

NASDAQ OMX Group is a for-profit corporation that trades on NASDAQ under the symbol “NDAQ”.

• Although NYSE Euronext’s website states, “NYSE Euronext brings together six cash equities exchanges in five countries and six derivatives exchanges”, I was unable to find a list of the exact exchanges on their website. My email to NYSE Euronext’s Customer Support (support@nyx.com) was never answered.

A similar situation prevails on NASDAQ OMX’s website, where its European holdings are simply referred to as “Nordic Exchange” and “Baltic Markets”. I only found the exact exchanges in a note to their 10-Q.

During my research, I got the impression that NYSE Euronext and NASDAQ do not want to make their holdings perfectly transparent.

• If there’s a graduate student in our midst who needs a topic for a dissertation, I would propose pursuing the ownership links in all of the world’s stock exchanges.


Sources

• NASDAQ OMX Group, Inc. (symbol: NDAQ) Form 10-Q for quarter ended June 30, 2008
• NYSE Euronext (symbol: NYX) Form 10-Q for quarter ended June 30, 2008
• Wiener Borse website
• Wikipedia entry for NASDAQ
• Wikipedia entry for NYSE Euronext
• Wikipedia entry for Wiener Borse

In 2005, before the most recent flurry of acquisitions, the BATS “exchange” (BATS ) was created because “market innovation and technology leadership were at risk due to over consolidation in the Exchange industry”.

“Market innovation” and “technology leadership” don’t bother me. I look for more nefarious factors. Here’s my secondary concern about the “consolidation”.

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On another discussion forum, a university professor who studies the microstructure of markets asked me four technical questions about the Prague Stock Exchange, including:

"d) Are there institutionalised trading halts for extreme price volatility (some exchanges put that in placed since Oct 1987)?"


Here's my reply:

"I couldn’t find an answer to this question on the Prague Stock Exchange’s website, so I sent an email message to their Information Service (info@pse.cz)

On August 25, 2008, the Prague Stock Exchange sent this response to me:


We don't have common trading halts due to extreme price volatility.

Best Regards,

Jan Kavka
Externí komunikace / External Communication
Burza cenných papírů Praha, a.s. / Prague Stock Exchange
Rybná 14, 110 05 Praha 1
Tel.: +420 221 832 172
Fax: +420 224 814 193
kavka@pse, Home Page - Prague Stock Exchange “



Three weeks later, the Prague Stock Exchange halted trading of the stocks “ECM” and “NWR” multiple times in a single day “due to the price decline”.

Since those first trading halts on September 16, 2008, the Prague Stock Exchange has halted trading with reckless abandon in various stocks (remember—there’s only 14 companies listed on the Prague Stock Exchange).

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A colleague in Dubai and I recently discussed “dirty tricks” that are used during bear markets. We thought that the Securities and Exchange Commission’s ban on short selling of selected stocks only a few days before the markets started to crash was an interesting “coincidence”.

By the end of our discussion, we concluded that, in general, trading halts are probably the most prevalent dirty trick used during bear markets.

Who controls trading halts? The exchanges.

From my perspective, if a group of manipulators intends to fiddle with the markets, I want their deeds to be as difficult to accomplish as possible.

Which arrangement do you think this group of manipulators would prefer? Each stock exchange managed by a different executive team OR a multitude of exchanges controlled by only NYSE Euronext, Wiener Borse, and NASDAQ OMX Group?