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Posts Tagged ‘york stock exchange’

February 15, 2011, 4:12 PM EST

By Whitney Kisling, Nandini Sukumar and Elizabeth Stanton

(Updates today’s trading in 13th paragraph.)

Feb. 15 (Bloomberg) — Deutsche Boerse AG’s $9.53 billion all-stock purchase of new York Stock Exchange parent NYSE Euronext creates the world’s largest owner of equities and derivatives markets, and may spur additional mergers.

the deal, which gives Deutsche Boerse 60 percent of the combined entity, forms an organization with market share in futures that’s similar to Chicago-based CME Group inc. it would also top CBOE Holdings inc. of Chicago in U.S. options. Deutsche Boerse’s plan follows Singapore Exchange Ltd.’s October bid for ASX Ltd., which runs the Australian stock market, and London Stock Exchange Group Plc’s agreement last week to buy Canada’s TMX Group inc.

“I don’t think we’re done with this consolidation round,” said Peter Kovalski, manager of two financial-services mutual funds at Alpine Woods Investments in Purchase, new York, which manages $6 billion. “in order to fend off any new upstart exchanges, the established exchanges have to continue to drive their costs down so that it would be cost-prohibitive to put together the infrastructure needed to form an exchange.”

CBOE Holdings and new York-based Nasdaq OMX Group inc. rallied yesterday amid speculation they may be the next exchange operators to be purchased, said Patrick O’Shaughnessy, an analyst at Raymond James & Associates inc. in Chicago.

“It’s fair to say the speculation is somebody might be wanting to buy either CBOE or Nasdaq,” O’Shaughnessy said yesterday. “CBOE and Nasdaq are two of the names constantly thrown around as being potential takeover candidates.”

CME said today that “like other industry participants, we will continue to monitor ongoing developments in the global exchange sector and the implications of those developments on our long-term growth strategy.”

Hong Kong Exchanges & Clearing Ltd., currently the world’s biggest exchange operator at $23.3 billion in market capitalization, said last week that it’s open to “alliances, partnerships and other relationships.”

Deutsche Boerse, which runs the Eurex futures platform and Frankfurt Stock Exchange, is swapping one share of its own stock for one share in the new company, while every NYSE Euronext share will be converted into 0.47 share, according to a statement today. Reto Francioni, the chief executive officer of Frankfurt-based Deutsche Boerse, will serve as chairman. Duncan Niederauer, CEO of new York-based NYSE Euronext, will keep that title at the combined organization.

while the merged entity will list corporations with about $15 trillion in value, more than any other exchange, what may prove more lucrative is ownership of growing venues for trading futures and options, said Rich Repetto, a new York-based analyst at Sandler O’Neill & Partners LP.

“my brain says it makes sense, but my heart is a little bit disappointed” about the deal, said John Lynch, Charlotte, North Carolina-based chief equity strategist at Wells Fargo Funds Management, which oversees about $465 billion. “Sentimentality aside, it’s the right thing to do if the merger can reward shareholders with improved exposure to the options and derivatives market internationally.”

Deutsche Boerse will get 10 of 17 seats on the combined company’s board, according to today’s statement. the deal values NYSE Euronext at 8.3 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That compares with 9.35 times Ebitda for TMX and 18.45 for ASX, the data show.

about 37 percent of revenue at the joined company will come from derivatives trading and clearing, making it the largest unit based on 2010 revenue, according to today’s statement. Cash listings along with trading and clearing accounted for 29 percent, settlement and custody made up 20 percent, and market data and technology services was 14 percent, the statement said.

NYSE Euronext fell 3.4 percent to $38.12 at 4 p.m. in new York and lost 6.8 percent earlier, the most intraday since May 6, 2010. Deutsche Boerse slipped 2.4 percent to 59.85 euros. the new company will list shares in new York, Frankfurt and Paris and be organized as a Dutch holding company.

while the joined company’s name hasn’t been picked, proposals should be ready for consideration by the companies’ boards in the next month or two, Niederauer said at a press conference in new York today.

‘Negative Consequences’

“NYSE is one of the preeminent brands in the financial industry, and there is no reason it shouldn’t come first in the new exchange’s name,” Sen. Charles Schumer, a Democrat from new York, said in a statement today. “if Deutsche Boerse pushes any alternative name, it would be an indication that they are not viewing this deal as a merger of equals and that could have negative consequences with regard to future decisions on the merger’s implementations.”

NYSE Euronext said last week that derivatives revenue climbed 14 percent in 2010, while cash equities fell 10 percent. By 2013, NYSE Euronext may generate more than 50 percent of its earnings from options and futures, according to Ed Ditmire, an analyst at Macquarie Group Ltd. in new York, who has an “outperform” rating on the stock.

Derivatives are financial instruments used to hedge risks or speculate. They can be based on an underlying asset such as stocks, bonds, currencies or commodities, or linked to specific events like changes in interest rates.

largest in U.S.

NYSE Euronext is the largest U.S. equities exchange operator with 26 percent of volume last month, according to data compiled by London-based Barclays Plc. in Europe, the combined company’s share of stock trading was more than 27 percent over the past five days, beating London Stock Exchange Group’s 25 percent across its venues, according to data compiled by Bats Global Markets, an exchange operator in Kansas City, Missouri.

Combined, the companies will manage futures exchanges whose volume is about the same as those owned by CME. NYSE Liffe, NYSE Liffe US, Eurex and five NYSE Euronext markets that trade futures and options together executed about 3.1 billion contracts last year, the same as CME’s three futures exchanges, according to data from the Futures Industry Association, a Washington-based trade group representing Wall Street banks. the data exclude trading in U.S. options markets, which don’t handle futures.

the merged company will also join three of the nine U.S. options exchanges to surpass CBOE as the nation’s biggest operator. the International Securities Exchange is owned by Eurex, which is controlled equally by Deutsche Boerse and SIX Swiss Exchange Ltd., while NYSE Euronext operates NYSE Amex Options and NYSE Arca Options. the three markets handled 43 percent of U.S. options trades last year, compared with CBOE’s 29 percent, according to Options Clearing Corp. data.

‘Formidable Force’

the deal “reflects the globalization of trading, and will be a formidable force in a number of asset classes,” Timothy Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, new York, which manages $2 billion, said yesterday. “it might end up sailing right through, but there are potential issues from a regulatory standpoint in lots of different areas and jurisdictions.”

Deutsche Boerse is getting financial advice from Deutsche Bank AG, JPMorgan Chase & co., Credit Suisse Group AG, and Societe Generale. NYSE is using Perella Weinberg Partners LP, BNP Paribas, Goldman Sachs Group inc. and Morgan Stanley. Linklaters LLP is providing legal counsel to Deutsche Boerse, and NYSE is using Wachtell Lipton Rosen & Katz LLP, Stibbe NV, and Milbank Tweed Hadley & McCloy LLP.

the U.S. Department of Justice and Securities and Exchange Commission will have to sign off on the transaction.

“There’s nothing insuperable that will stand in the way for the SEC to approve this deal,” said Robert Colby, who left the SEC in 2009 after 28 years at the agency. He helped transform U.S. equities trading from a dealer-driven market to a series of electronic venues that provide investors with faster and cheaper executions. “They cleared the same hurdles when Eurex bought ISE,” said Colby, now a partner at law firm Davis Polk & Wardwell LLP.

Deutsche Boerse’s Eurex bought new York-based International Securities Exchange Holdings inc., an options market, in 2007. Exchanges have completed almost $100 billion of mergers since January 2000, according to data compiled by Bloomberg. NYSE combined with Euronext NV in 2007. TMX bought Montreal Exchange inc. in 2008, a year after London Stock Exchange Group purchased Borsa Italiana SpA. IntercontinentalExchange inc. acquired the new York Board of Trade in 2007.

Four years after losing to the new York Stock Exchange in the takeover of Euronext, Deutsche Boerse’s Francioni, 55, is buying both companies and putting his rival’s chief executive officer in charge.

while Francioni is known for cutting costs by shifting jobs to Prague from Frankfurt and moving to cheaper headquarters, Niederauer, 51, built his reputation running Goldman Sachs Group inc.’s specialist operation on the floor of the NYSE, describing himself as “obsessed” with the structure of equities trading. He has boosted technology spending as competition with about 50 U.S. trading venues drove NYSE Euronext’s stock price down 54 percent through yesterday since he became CEO in 2007.

“Reto has done a good job, especially on costs,” said Dirk Hoffmann-Becking, London-based exchange analyst at Sanford C. Bernstein Ltd. “but we are in a different world now. He’s picked a great opportunity at this juncture to move Deutsche Boerse into another league, and credit to him, he’s prepared to step aside to make the deal go through.”

the companies said today that the deal will reduce costs by 300 million euros ($405 million) within three years of the deal’s completion, which they expect in 2011.

Francioni became CEO in 2005 after shareholders ousted Werner Seifert over his failed attempt to buy the London Stock Exchange. Deutsche Boerse’s stock rose 57 percent through yesterday since his appointment was approved.

Niederauer, who spent two decades at Goldman Sachs before joining NYSE in 2007, has emphasized technology at the 219-year- old company to combat market-share losses. He built data centers in Mahwah, new Jersey, and outside London where customers can house trading systems and bolstered the company’s computer- services unit with the goal of generating $1 billion in sales a year.

“I’m a big fan,” said Dick Grasso, the former chairman and chief executive officer of the new York Stock Exchange who was forced to quit in 2003 after receiving $140 million in pay. “He’s driven the exchange through some of the most competitively challenging waters that the institution has ever seen,” Grasso, 64, said last week. “He’s done an excellent job.”

–With assistance from Zachary R. Mider, Nina Mehta, Jeffrey McCracken, Jennifer A. Johnson, Jeff Kearns, Rita Nazareth, Michael Tsang and Nikolaj Gammeltoft in new York, Lynn Thomasson and Hanny Wan in Hong Kong and Rebecca Christie and Jeff Bliss in Washington. Editors: Nick Baker, Joanna Ossinger

To contact the reporters on this story: Whitney Kisling in new York at wkisling@bloomberg.net; Nandini Sukumar in Frankfurt at nsukumar@bloomberg.net; Elizabeth Stanton in new York at estanton@bloomberg.net.

To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net; David Merritt at dmerritt1@bloomberg.net.

Deutsche Boerse $9.53 Billion NYSE Buy May Spur Deals

The Hindenburg Omen

Like we don’t have enough to worry about, the stock market just tripped the dreaded Hindenburg Omen. That’s when an unusually high number of stocks reach 52-week highs and 52-week lows.As you can probably guess from the name, the Hindenburg Omen means bad news as it’s named after the biggest disaster to hit the Garden State until the second season of Jersey Shore.from Bloomberg:

This week’s plunge in U.S. stocks triggered a technical indicator known as the Hindenburg Omen that may signal a more severe selloff, according to analysts who follow charts to predict market moves.the market signal, named for a German zeppelin that caught fire and crashed more than seven decades ago, occurs when an unusually high number of companies in the New York Stock Exchange reach 52-week highs and lows. the indicator last occurred in October 2008, according to UBS AG.the Standard & Poor’s 500 Index yesterday completed the biggest three-day decline since July 1, after an unexpected increase in unemployment claims added to evidence an economic recovery is weakening. the benchmark gauge for U.S. stocks has dropped 3.4 percent so far this week as Federal Reserve policy makers said growth “is likely to be more modest” than they previously forecast.the indicator may suggest “a savage equity downturn is imminent,” said Albert Edwards, a London-based strategist at Societe Generale SA, who has told investors to favor bonds over stocks for more than a decade. “Equities are tottering on the edge as increasingly recessionary data becomes apparent. it would not take much to tip them over that edge.”The Hindenburg signal was triggered yesterday as the proportion of stocks reaching new one-year highs and lows both exceeded 2.2 percent of the total listed on the NYSE, according to Michael Riesner, a technical analyst at UBS in Zurich.Rising MarketThe number of stocks at a 52-week high must not be more than twice the number marking lows, the technical theory also says, according to analysts. the indicator is only valid in a rising market, as defined by the NYSE Composite Index’s rolling average value in the last 10 weeks. it must also occur when the NYSE McClellan Oscillator, a measure of market momentum, is negative.the Hindenburg Omen must be confirmed with a second occurrence within 36 days, according to Riesner. He said the signal occurred seven times in 2008 as the S&P 500 posted its biggest annual drop since the great Depression.“It’s an interesting name but what you really have as a technical background is a classic distribution phase in the market,” Riesner said. “It’s the classic tug of war between bulls and bears that you have there.”In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. UBS is ranked as the top bank for equity technical analysis and charting according to a 2010 Thomson Extel survey.

Posted by Eddy on August 14th, 2010

The Hindenburg Omen Crossing Wall Street

They always talk about ups and downs. is this really anything significant?

What was this woman upset about?
http://news.yahoo.com/nphotos/Lehman-Bro…
What is a specialist working the floor of the New York Stock Exchange, and what does she do?

it fell like almost 5 percent…which is substantial

How bad did the Stock Market really fall yesterday?

It’s been my dream for quite a while now to work on Wall Street or the New York Stock Exchange – come September; I’ll be a junior in high school. I make really good grades. I plan to get a bachelor’s degree in Economics then go on to either get a Law degree or an MBA. what do I need to do to get a job on Wall Street / New York Stock Exchange? I want to be either a lawyer, investment banker, or stockbroker. any advice?

How to get to Wall Street/NY Stock Exchange?