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Oracle sees future with NYSE; gives NASDAQ the boot

Jun 21, 2013
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Tech company Oracle — maker of computers and database software among other things — announced it was moving from NASDAQ to the New York Stock Exchange. In a statement, Oracle said this is “in the best interests of its stockholders, customers and partners.”

But the statement didn’t say how. Partly, it’s about image, says Eugene White, professor of economics at Rutgers. Traditionally, he says, NYSE has been a place for established, less volatile “blue chip” stocks, whereas NASDAQ was the place for brash,  up and coming tech startups. While NASDAQ continues to have more tech companies — 680 compared to the NYSE’s 208, according to NASDAQ spokesman Joseph Christinat — that line has blurred significantly since the tech boom.

Still, White says, “Oracle is basically trying to signal that its less of a volatile high tech company and more of a solid bluechip company.” He likens it to a “velvet rope effect.”

“Once you’re inside this club, it looks like you’re more stable,” he says. “It’s really a signaling device.”

Oracle could also be targeting a different type of trader at NYSE, and different financial instruments like derivatives, says MIT professor of strategy and technology Pai Ling Yin. To the extent that the different exchanges have different traders, Oracle may be looking for “a more international group perhaps a group of traders who are interested in many more different…financial instruments trading on NYSE,” he says.

But really, this may also be a case of good old fashioned poaching. “The intiative for this move came from NYSE,” says Yin. “I don’t think it came from Oracle pursuing NYSE to go and move their stock.”

NYSE and NASDAQ are always battling over attracting big companies. They’ll offer lower listing fees or other discounts in order to woo one company or another. “I think oracle got a good deal and they took it,” says Yin.

Last year, NASDAQ landed Facebook and won over Kraft Foods and Goodyear. The Oracle deal is NYSE’s way of hitting back. 

A spokesman for NYSE (total market cap in the U.S.: $18.91 trillion) pointed out that this was the largest switch from one exchange to another, totaling $156.4 billion in value, and that $318 billion has transferred from NASDAQ to NYSE since 2010.

Not to be outdone, a spokesman for NASDAQ (total market cap in the U.S.: $5.3 trillion) drew attention to the fact that $523 billion in market capitalization has switched to NASDAQ since 2005, whereas $334 billion in market cap has switched to NYSE since 2005.

Spokesman Joseph Christinat added that NASDAQ “has delivered one of the most liquid stocks in the world, Oracle, whose market cap has grown 10,000 percent since 1990. We wish them well in the future,” he said.

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