Possible Merger between NYSE and Deutsche Borse.

[Perchoutofwater]

Merger Could Take NYSE Out of American Control

Deal with German company in the works

By CHRIS GLORIOSO

Updated 8:48 AM EST, Fri, Feb 11, 2011

 

A German company is in high-level talks to acquire the New York Stock Exchange, Wall Street's most recognizable institution. According to reports published in both the German and American financial press, Deutsche Borse, a Frankfurt-based stock exchange is seeking to take a 60 percent ownership interest in the NYSE. The merger would create the world's largest financial exchange.

 

News of the deal sent both NYSE and Deutsche Borse stock soaring Thursday.

 

If US and European regulators sign off on the plan, the new parent company would have dual headquarters in Germany and America. The merger is not expected to result in major layoffs in New York. However, the ranks of face-to-face stock traders have already thinned considerably on Wall Street in recent years.

 

"Stock trading is a commodity business. There's just no money in it anymore," said Greg David, director of Business & Economics Reporting at the CUNY Graduate School of Journalism.

 

"The fifth largest stock trading firm in the world is located in an office park off the New Jersey Turnpike, so it's a business that has to change."

 

The merger rumblings were greeted positively by investors, largely because the deal with Deutsche Borse would give the NYSE an instant presence in the lucrative derivatives markets. Traditionalists in the stock business have expressed hesitation about that transition.

 

"The reason for the stock exchange was to raise capital for business," said William Higgins, a retired trader who owns 70,000 shares of NYSE stock.

 

"These derivatives raise no capital. They're a new method of gambling."

 

I'm not educated enough on the subject to know if this would be good or bad, but my gut says bad. I was wondering what those of you that know more about the exchanges think of this. Weren't derivatives one of the things Obama and the dems blamed the mortgage crisis on?

[TimC]

C'mon man...it's not like Germany has ever done anything in the past to warrant any suspicion whatsoever. Stop being so paranoid.

[Ursa Majoris]

I'd rather see NYSE act simply as a place to trade stocks but since the market is pretty much already just a glorified casino, I guess this won't make much difference. I'd rather see the market revert to it's previous "boring" persona too, slow but steady growth over decades, but that ain't coming back either. White knuckle rides are in, boring is out.