Stock specialist kingpin Michael LaBranche is either being stoic or brave, but he insists that the coming mega-merger between the New York Stock Exchange and Euronext is going to be great for business.
LaBranche, the head of one of the last seven specialist firms on the NYSE floor, said his only real surprise about the merger remains the speed at which the deal was done.
“Two years ago, I would not have believed this could happen as quickly as it did. Or even, that it would have happened,” said LaBranche.
NYSE boss John Thain, the architect of the Big Board’s newfound acquisitive nature, may soon turn his attention to linking to one of the major Asian markets, too, according to news reports yesterday.
LaBranche conceded that it was likely to hasten the continuing reduction in floor personnel, adding quickly that doomsayers predicting the end of the specialists and the auction market “are wrong, as usual, as they have been since I got here in 1977.”
Three years ago, he had 420 people working on the NYSE floor. Now he has 270.
On the surface however, the nay-sayers have a point.
They can point to LaBranche & Co.’s declining revenue in specialist and market making – to $283.6 million last year, from $401.2 million in 2002 – and paint a gloomy picture.
Also, LaBranche’s hefty 25.1 percent share of involvement in all NYSE listed trades loses some of its luster when the NYSE is trading barely 75 percent of its own stocks.
Independent research shop Morningstar drew a more blunt conclusion.
It argued LaBranche had a fair value of zero and should be avoided, according to Motley Fool.
To LaBranche, the shift away from reliance upon the trading of NYSE listed equities has been happening for years and misses the larger point.
“We’re well-positioned to capture the expanding business in exchange traded funds, indexes, options,” he said.
LaBranche also has 3.1 million NYSE shares, valued at over $200 million, which should handily stave off the credit woes that hamstrung the firm three years ago.