Even as the historic $10.2-billion merger between the German Deutsche Börse AG and the transatlantic NYSE Euronext is finally announced, there continues to be several concerns on both sides of the Atlantic over naming and management control given the strong sense of nationality and pride that is associated with the operation of the NYSE.
While there are suspicions in Germany over the New York faction retaining overall management control under NYSE Euronext Chief Niederauer (who would also head the combined entity), several authorities in the United States fear that the New York Stock Exchange will lose influence given that 10 of the 17 board seats would go to DB members.
As the financial world waits for the emotional, political and regulatory hurdles to be cleared to pave the way for foundation of the world's largest exchange operator, we take a quick look at the rich 220-year history of the New York Stock Exchange in terms of 5 key events that shaped it along the way.
The birth of the US investment markets can be traced back to 1790 when the federal government issued $80 billion in bonds for repayment of Revolutionary War Debt. Two years later, in 1792, 24 stock brokers and merchants signed the Buttonwood Agreement – so named after the buttonwood tree under which they met informally - agreeing to trade securities for commission at the Tontine Coffee House. That marked the first institutionalization of securities trading in Manhattan. Incidentally, the first listed company on the exchange was Bank of New York, traded under the Buttonwood Tree, 1792.
(Photo shows an artistic rendition of The New York Stock Exchange in 1882 by American illustrator and scenic artist Hughson Hawley)
WikipediaIn 1817, the group rented rooms on 40 Wall Street to launch a formal organization called the New York Stock & Exchange Board. In 1863, the name was changed to the New York Stock Exchange. (However, it was not until February 18, 1971 that it was incorporated as the New York Stock Exchange Inc, a not-for-profit corporation.) In 1903, the exchange moved to its present abode amid much fanfare and festivity. Till date, the Exchange building is considered an architectural masterpiece and is a New York City and national landmark.
(Photo shows the Exchange Building built in neoclassic design by architect George B. Post.)
ReutersIn 2006, the exchange merged with electronic trading rival Archipelago Holdings through a $9-billion transaction, creating the NYSE Group. Inc., a publicly traded for-profit company. This gave the NYSE (which with its floor auction system of human traders had been facing stiff competitive pressure from electronic exchanges like NASDAQ) high-tech trading capabilities and almost 49% of the market in stock trading.
(Photo shows members of Archipelago Holdings, Inc. and members of New York Stock Exchange ringing the opening bell in New York in 2006)
ReutersIn May 2006, the NYSE Group bid €8 billion in cash and shares for Paris-based Euronext N.V. and penned a merger agreement with the latter, subject to shareholder vote and regulatory approval, despite a higher counterbid from Germany’s Deutsche Börse AG, which eventually withdrew the bid. The merger was finally completed with the stamp of SEC approval in 2007, creating NYSE Euronext.
The merged firm was to be led by NYSE Group boss John Thain, with Euronext chief executive Jean-Francois Theodore as deputy chief executive officer and head of international operations. It created a truly global marketplace and brought many European firms under the NYSE which may otherwise have chosen not to list in the US markets, because of the implementation of extensive and stringent regulation following a series of corporate scandals, such as the collapse of Enron. The merger also reduced the costs and bureaucracy hitherto associated with transatlantic trading.
(Photo shows the facade of the New York Stock Exchange decorated with the American flag, flags of European countries, and a banner announcing the NYSE Euronext alliance in April 2007)
ReutersOn Feb. 9, 2011, NYSE Euronext and Deutsche Börse AG confirmed speculation that they were in fact engaged in advanced discussions regarding a potential business combination. A finalized deal was announced on Feb. 15, upon approval from both companies’ boards.
Reuters
