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Capital Markets
Is bigger better?
NYSE Merger Seen As Necessity In A Changing World ... from February 2011
Peter Burgess
The parent company of the New York Stock Exchange says it has agreed to be acquired by the operator of the Frankfurt stock exchange, Deutsche Boerse.
The deal announced Tuesday will create the world's largest financial markets company. Deutsche Boerse shareholders will own 60 percent of the new company, which is yet unnamed. Shareholders of NYSE Euronext Inc. will own the rest. The transaction is expected to close at the end of the year, but faces several layers of approval.
Investment professionals reacted to the foreign buyout of a U.S. icon while facing the reality that the merger is strictly business in a global economy.
'It reminds me of the '80s when we were worried about Japan coming and buying everything we hold dear - Pebble Beach golf course, the Washington Monument, the Statue of Liberty, everything. But I think it's short-lived and then it's back to business.'
Scott Marcouiller Chief technical market strategist, Wells Fargo Advisors St. Louis, Mo.
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'The deal reaffirms what Wall Street already knows: Open-outcry trading is dead. The exchanges are now electronic and size and scale matter.'
Jack Ablin Chief investment officer, Harris Private Bank Chicago
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'Technology has been so strong that it's creating a one-world market. This is just one more step in that direction. Whether we like it or not, the world's moving forward on that technological platform and we don't have a choice if we want to be a leader. If we don't get on board this train we're going to be left behind.' Kimberly Foss President, Empyrion Wealth Management Roseville, Calif.
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'Clients aren't even asking about it. It's a natural event. In the end, if people can get a great execution (of their trades), they won't care if they're executing on the New York Stock Exchange or somewhere else.' Nathan White Chief investment officer, Paragon Wealth Management Provo, Utah
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'The NYSE is going to basically be blurred with dozens of on-market and off-market traders around the world and that the standards of listing that were once the envy of the world will be eroded and the accounting principles used to establish the listings will be diluted. The outcome is that investors will be more on their own rather than having a stock exchange play the role of maintaining high quality.' Steve Robling Managing director, LIATI Group LLC, a boutique merchant banking firm New York City
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'One concern I would have is how it would impact which stocks can trade on those exchanges and what oversight there is going to be to make sure their i's are dotted and their t's are crossed. Who's in charge of it? Is it going to be a joint task between countries? That's the only aspect that worries me.' Ethan Anderson Senior portfolio manager, Rehmann, an accounting, consulting, and financial advisory firm Ann Arbor, Mich.
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'We may lose the cachet of having the once-powerful New York Stock Exchange, which was a powerful brand for many years. It won't be the same brand it was before but at least it will still be in existence and it will keep New York City and the United States as players in the financial services industry.' Ron Richard Founder and managing partner, Agon Capital, commodities trading firm New York City
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'It won't make a lot of difference for the average investor. What it does is continue to make sure that markets have a lot of buyers and sellers coming together. That's usually good news for individual investors.' Kate Warne Investment strategist, Edward Jones St. Louis
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'This merger isn't a quick turnaround. It's going to face regulatory scrutiny and potentially political scrutiny and maybe some political backlash because we're 'losing one of our icons.' But I suspect that's going to be blustering and rhetoric and nothing's going to come of it.' Hank Smith Portfolio manager and chief investment officer, The Haverford Trust Co. Philadelphia
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'I don't think that the management of the New York Stock Exchange would have entertained this overture unless they thought it was vital to, not just their profitability, but their survival. This is just another step on the way to global markets. It's tough on the ego, maybe, but a little humility once in a while doesn't hurt.' Robert Stovall Managing director, Wood Asset Management Sarasota, Fla.
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First published on February 15, 2011 / 2:40 PM © 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.