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One untold story of our time is how bad an investment our stock exchanges have been, especially the powerful New York Stock Exchange.

The NYSE, and its European partner Euronext, are traded every day under the ticker symbol NYX. If you bought $100 of NYX at the start of the year, you now have $89. If you did it five years ago, you now have less than $25.

Holders of Nasdaq stock, traded as NDAQ, have not fared much better. Since January you'd be down to $95.80 on $100 in NDAQ, and over five years you'd be down to $57.

On the surface this all seems wrong. While 2008 was an annus horribilus, profits have returned, and for all of 2011 NYX had revenues of $4.3 billion, taking $619 million to the bottom line. That's about in line with 2010. There's even a dividend of 30 cents a quarter, which means a yield of 5.16%!

But beneath the surface things are not good, and that yield is under real threat. The September quarter's profits fell 42%, to $124 million from $165 million, which the exchange blamed on lower trading volume. They were, frankly, hit by Europe, and about half that earnings reduction can be explained by the falling Euro and Pound.

If that were all that was going on you might write it off as a one-off, but that's not all that's going on. The company's Project 14, in which it is trying to slash $250 million/year in expenses over the next two years, looks like a fiasco, and the recent floods have to knock those goals back at least a quarter. Yesterday's complete market fail - 216 stocks failed to close - shows that the technology platform has not kept up.

The company insists the new Universal Trading System will work fine, but the NYSE is not the only place you can trade these stocks. There is competition, and one trader called what happened yesterday "almost a non-event" and hidden within stories of the glitch is the fact that the company is losing market share in what it does.

NYX CEO Duncan Niederauer has been at his post since December, 2007, and was praised throughout the last week as a hero of the Sandy recovery, for losing only two days of trading. But measured just as a CEO, against other CEOs running other companies, it's time to admit that his reign has been a failure, and wonder what comes next.

My own view is that the company's attachment to its own self-image, and its trading floor, has not kept up with the changing technology landscape. It's a victim of its own hubris and should act as a regulator, not a corporate entity at all. Because as a company it's a fail whale -- not quite Groupon (NASDAQ:GRPN) but close.

Source: NYSE May Be Good For Business But It's A Bad Business