A clash of symbols

Amy Scott Apr 25, 2007

A clash of symbols

Amy Scott Apr 25, 2007

KAI RYSSDAL: As long as we’re on the markets, let’s do a little trivia quiz while we’ve got a minute here. An easy one to warm up. What’s Google’s ticker symbol? GOOG would be the right answer. All right now, what about General Electric? Also an easy one to tell you: GE.

That’s handy stuff to know if you’re an investor. But for companies, ticker symbols carry a certain status. And they aren’t just handed out willy-nilly. A symbol of one to three letters suggests the company is listed on the New York or American Stock Exchange. Companies on the newer NASDAQ, meanwhile, use four- and five-letter symbols. At least for now they do. Marketplace’s Amy Scott reports.

AMY SCOTT: Last month, Delta Financial Corporation began trading its shares on the Nasdaq stock market. Company executives gathered in Times Square to ring the opening bell, which basically entails posing for pictures as an electronic soundtrack blares.

What was unusual about this opening was Delta’s ticker symbol: DFC. Those are the same three letters it had used previously to trade on the American Stock Exchange.

Nasdaq CEO Bob Greifeld himself marked the occasion.

BOB GREIFELD: They are the very first company on the Nasdaq stock market in our 36-year history to use a three-letter symbol. And we congratulate you for that.

But not everyone applauded Nasdaq’s move. The New York and American Stock Exchanges have asked the SEC to ban Nasdaq from using shorter symbols. They argue that a change could confuse investors and create a symbol shortage.

Ed Moore is general counsel at RPM International. It makes industrial coatings and sealants. The company trades as RPM on the New York Stock Exchange. Moore says those three letters convey an important association with the NYSE.

ED MOORE: I mean you can’t deny it. I believe that it’s still considered to be the largest market in the world. And I think it’s been a real benefit to our shareholder base to have that.

But companies also hate to switch symbols if they change markets. They have to do marketing. Investors don’t know how to find them on the internet. And Nasdaq argues the current system unfairly protects the New York Stock Exchange’s business by making it less convenient for companies to list elsewhere.

James Angel teaches finance at Georgetown University. He says it’s a dilemma familiar to consumers.

JAMES ANGEL: It’s a lot like switching phone companies. If you can take your phone number with you, it’s a lot easier to switch from one phone company to another, because you don’t have to tell all your friends you got a new phone number.

Angel says this battle over the alphabet is just another stage in a fierce struggle between Nasdaq and the New York Stock Exchange for trading volume and for listings.

ANGEL: A decade ago, it was unheard of to hear of companies moving from the New York Stock Exchange to Nasdaq. But we’ve seen companies actually doing that in the last few years.

That’s partly because the SEC forced the New York Stock Exchange to abandon an old rule. It required companies to get shareholder approval before switching markets. Some companies prefer Nasdaq’s all-electronic market to the NYSE’s hybrid system, where people still execute a lot of the trades.

Now Nasdaq wants to make it even easier for companies to switch. The SEC says it will settle the matter soon. Public comments were due today.

As for Delta Financial Corporation, it gets to keep its three-letter ticker symbol, whichever way the SEC rules. Regulators approved the switch as a one-time deal.

In New York, I’m Amy Scott for Marketplace.

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