Thursday, April 13, 2006

NDAQ vs NYX - part II

In the previous article we compared Nasdaq vs Nyse and looked at some of the competitive advantages/disadvantages of each exchange. Since the writing of that article and analyzing the chicago mercantile exchange CME has popped where as Nasdaq has remained stable thanks to the LSE deal. Nyse has dropped a bit in this period.

Nasdaq has won round-1 with holdings in LSE. It is going to be difficult for someone else (NYSE, CME ) to mount a take over of London Stock Exchange. However, it is early to discount Nyse as it mulls its next move. Expect some more action in this front in the next few months.

It can also get real interesting if/when NYX and Nasdaq get into the futures trades. CME has been doing very well as a for profit company. Amex has some plans to go public itself sometime next year. So here is the current score -
  • Creating a global network of stock exchanges - advantage NDAQ
  • Trend - Every IPO has had a pop. CME, NDAQ after going public. Advantage NYX.
  • Size - The market cap of all securities listed in NYX is 20+ trillion. NDAQ is 2.2 trillion. NYX market cap is four times that of NDAQ. Advantage NYX.
  • Revenues - NDAQ recovered after years of stagnant/declining growth after buying INET and others. NYX has had steady revenues and Archipelago is gaining market share. Advantage NYX.
  • Stock dilution - NYX former seat holders will oppose significant dilution by acquisitions without adding value. Advantage NYX.
  • Listing companies - NDAQ fees are lower. Advantage NDAQ.
  • Cost cutting upside - NYX has been a non profit. ( Grasso's pay excess is one example ). More opportunities to cut costs to make it a leaner organization. Advantage NYX.
  • Moving the big board to electronic trade - neutral for the moment.
  • Valuation - Difficult to put proper numbers around NYX right now - neutral for the moment.

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