NYSE Takes the Plunge
In the end, there was little suspense, as members of the New York Stock Exchange voted Tuesday to merge with the electronic Archipelago Exchange (AX).
The vote to approve the merger was virtually a foregone conclusion after a New York judge on Monday approved a settlement in a lawsuit that challenged some aspects of the deal.
But the approval was still a historic event and marks the end of the NYSE's 213-year history as a private company. In merging with Archipelago, the nation's first electronic stock exchange, the Big Board will become publicly traded.
Archipelago shareholders approved the deal earlier Tuesday. The NYSE's 1,366 members voted after the close of trading. More than 95% of voting members approved it."This is a truly historic day for the New York Stock Exchange and an event of great importance for our future and that of our customers and America's capital markets," said NYSE CEO John A. Thain. "In approving the merger with Archipelago, our members have embraced an initiative that enables the NYSE to maintain our leadership position and to advance our goal of becoming a global multiproduct marketplace." The acquisition of Archipelago will enable the NYSE to compete better with other electronic exchanges, including its rival the Nasdaq Stock Market (NDAQ), which also is a publicly traded entity. The merger is the consummation of Thain's vision to modernize the way stocks are traded at the Big Board. Since the deal was announced, the price of NYSE member seats has been soaring. A Big Board seat most recently sold for $4 million. Back in January, a seat on the NYSE could be had for under $1 million. Shares of Archipelago closed Tuesday at $59.83, up 219% since word of the deal broke in April. It's still not clear what the merger ultimately will mean for the Big Board's historic trading floor. Most stock markets around the world now trade shares electronically all the time. The Big Board's so-called "open outcry" auction for selling stock is considered by many to be anachronistic. In an attempt to appease some die-hard members, Thain has ruled out converting the NYSE into an all-electronic market. But some say that over time, shareholders may put pressure on the NYSE to ditch the trading floor, claming it's not cost-effective or efficient.
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