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NYSE makes Euronext offer

Bob Moon May 22, 2006

KAI RYSSDAL: It was kind of a so-so day on Wall Street. More to come on that at the usual time. But look around at the rest of the world, and it was kind of ugly. London’s FTSE was off more than 2 percent. The main Indian index sank more than 4 percent. Maybe not the best day for the New York Stock Exchange to go gobal. The NYSE is making a $10 billion offer to buy Europe’s number two exchange. It would create the first transatlantic securities market. And bring together the NYSE and exchanges in Paris, Amsterdam, Brussels and Lisbon. Marketplace’s Bob Moon has more.

BOB MOON: The goal is to build a powerful financial exchangea€¦with diversified trading choices and tremendous pricing power. NYSE chief John Thain boasted in a conference call that the combination of the NYSE and Euronext would list companies worth some 27 trillion dollars:

JOHN THAIN: Our market will be multi-product, multi-currency, multi-time-zone, geographically diversified – truly global.

But some market watchers say actually completing the deal will bring challenges of an equal scale. Foremost, working out the complications of how to reconcile regulations across two continents. Philip Guziec, is a market analyst for Morningstar.

PHILLIP GUZIEC: A simple example is, Sarbanes-Oxley in the US is a really onerous regulation. So what happens if a US company says, “You know what? We want to list in Europe on Euronext.” US investors can trade the shares that are listed on Euronext, and the US companies listing there, well, they’ve gotten out of this hideous regulation. Does that upset the SEC? What does the SEC do?

Guziec says the competitive pressure to globalize the exchanges is so great that the NYSE has no choice but to act swiftly. But Junius Peake at the University of Northern Colorado is worried:

JUNIUS PEAKE: I just think the New York Stock Exchange and Thain are sort of feeling they’re in a foot race. It’s a hundred-yard dash rather than the marathon that it will be.

Peake says the NYSE is still dealing with its own issues from becoming a publicly-traded company. And, as he puts it, “There’s a lot of digestion that still has to be done.”

In New York, I’m Bob Moon for Marketplace.

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