Change is coming to the Big Board.
CEO John Thain said he expected to get approval of his hybrid market plan near the end of the month – while a move toward ringing the opening bell an hour earlier and converting to a for-profit organization both advanced.
All are aimed at capturing more business for the New York Stock ExChange, staving off intense competition from electronic trading systems, and steadying the rocky market for seats on the exchange.
Thain hopes the proposal for the hybrid market, which he first put forth last August, will modernize the NYSE, increase revenue and keep Board members happy.
“We expect to get approved in the next three or four weeks,” Thain, 49, told reporters after he spoke yesterday at a conference on globalization. The approval will come from the Securities and Exchange Commission.
The hybrid proposal would mix electronic trading with floor trading and help the NYSE capture some business from other electronic markets.
Thain also said the exchange was moving forward with its plan to study whether it should convert to a for-profit enterprise.
The CEO plans to name a 10-person panel this month to consider the change.
The panel will include three NYSE customers, three floor brokers or other “practitioners” and three members, in addition to Thain, who will serve as chairman.
After 30 days of studying the issue, the panel is expected to issue a report in April, Thain added. To convert, the NYSE’s 1,366 members must vote on change and it must approved by the SEC.
As the price of a seat on the NYSE tumbled to under $1 million recently, Thain and NYSE board members have been coming under increasing pressure to convert from a not-for-profit organization.
A growing number of seat owners think that if NYSE management had profits in its eyes, the search for added business would be in its hearts.
Adding business could be accomplished by acquisition of other exchanges or through organic growth of the NYSE’s business.
Ultimately, these seat owners would like to see the exchange go public.
But that will take time – and profits.
“It’s something that’s been on the agenda for a while and something I’ve said I want to look at this year,” Thain noted. “Before we can go public we have to have a robust business plan.”
The NYSE reported a net loss of $1.6 million in the third quarter ended Sept. 30, compared to profits of $6.9 million in the year-earlier period. Revenue in the quarter was flat at $264.3 million, as was average daily volume: 1.33 billion shares.
In addition, Thain said:
* the NYSE is weighing a move to open an hour earlier, at 8:30 a.m., to capture the 2 percent of trades that happen after hours;
* there may be more mergers among U.S. markets because the country has “too many exchanges”;
* reports that John Reed, chairman of the NYSE, is planning to step down are true and that his successor likely will be one of the current board members.
Plugged in
John Thain’s plan to add more automated trading on the New York Stock Exchange may be approved by federal regulators by the end of the month. The plan’s highlights:
* Time restrictions between automated and floor-traded orders will be eliminated
* Orders larger than those at the best bid price can be broken up to trade at different levels
* Investors can place new auction-limit orders that can potentially receive a price better than the best bid