The city of Providence in Rhode Island has sued Bank of America (BAC), Virtu (VIRT), the New York Stock Exchange (NYX, ICE) and numerous other exchanges, brokerages and traders over high-frequency trading (HFT).
Providence argues that the defendants have siphoned off billions of dollars by rigging the securities markets, as Michael Lewis has claimed in his new book, "Flash Boys."
Providence is seeking unspecified damages from 42 defendants on behalf of all public investors that traded stocks in the last five years.
After confirming rumors in August by filing with the SEC, BATS Global and Direct Edge announced earlier today that the merger has been approved.
The combined exchange will be the 2nd largest market operator - behind the NYSE (NYX, ICE), and ahead of the Nasdaq (NDAQ).
In a press release, Joe Ratterman, CEO of BATS stated: "With the final regulatory approval received, we are focusing on closing the merger during the current quarter and beginning the integration of our two highly complementary companies."
Nasdaq (NDAQ) and the NYSE (NYX) are reportedly nearing an agreement to back up each others' data streams in a move that would help overcome common points of failure.
The exchanges are also discussing other ideas that could stabilize their infrastructure, such as passing the operational control of their securities information processors (SIP), which include price quotes, to a third party.
The report follows a number of technical problems on financial bourses, such as an outage of the Nasdaq in August.
"The exchanges need to help one another," says analyst E. Paul Rowady. "They have similar headline risk from the ongoing glitchapalooza."
The takeover of NYSE Euronext (NYX +1.6%) should close within days, says IntercontinentalExchange (ICE +2.2%) CEO Jeff Sprecher on the earnings call. Last week, the closing had to be called off as the firms awaited the necessary stamps from European regulators.
Earlier, ICE reported Q3 EPS of $1.97 (net of merger-related costs), beating estimates by $0.12.
ICE also declared a Q4 dividend of $75M (roughly $1 per share), contingent on the closing of the NYSE deal, payable on Dec. 31 to shareholders of record on Dec. 16.
The previously announced date of November 4 has been pushed back to allow time for European regulators and ministries more time to issue their approvals. The companies remind they have received letters from the Chairmens' Committee of the Euronext College of Regulators "that it is not minded to object to ICE's proposed acquisition" of NYX.
No new closing date is announced, but the companies expect receipt of the necessary approvals in a matter of days.
In a move that could pave the way for a U.S. IPO, Alibaba has received approval from the NYSE (NYX, ICE) and Nasdaq (NDAQ) to maintain management/founder control of its board, should it list on one of the exchanges. Hong Kong's unwillingness to agree to the same had led the Chinese e-commerce giant to pursue a U.S. listing.
Alibaba, whose Q2 numbers were released last week by 24% shareholder Yahoo (YHOO +1.8%), will likely have a $100B+ IPO valuation, given the current multiples being assigned to U.S. and Chinese Internet names. That means its offering could exceed Facebook's in size, and will easily dwarf Twitter's.
Michael Geltzeiler is the highest-profile NYSE Euronext (NYX -0.6%) executive to leave the company amid its being purchased by IntercontinentalExchange (ICE -0.7%). He'll be joining security company ADT shortly after the ICE deal closes in early November.
His departure isn't a huge surprise as the exchanges have previously said ICE CFO Scott Hill would take that role at the combined companies.
The date of November 4 is predicated on receipt of the necessary remaining European approvals. ICE and NYX have also set a date of October 31 for NYX shareholders to make their merger consideration elections.
"I would probably start by getting rid of rules," says IntercontinentalExchange's (ICE -1.7%) Tom Farley, musing about how to improve the U.S. stock market (he declined to say which rules). "There’s been several significant rules that have been layered on in the last 15 years that have resulted in a costly and complex market."
Farley's comments come less than two months after the Nasdaq (NDAQ -0.9%) was forced to shutdown for several hours due to a software glitch, and just ahead of the closing of ICE's buyout of NYSE Euronext (NYX -1.1%).
SEC Regulation NMS requires stocks to trade on whatever market has the best price at any given time, resulting in a massive fragmentation of U.S. trading - more than 50 systems. Futures trading has no such segmentation. "The futures markets aren’t perfect, but I was the president of our U.S. futures market for seven years and I never once had anybody complain about liquidity," says Farley. “There are whole conferences dedicated to the issue in equity markets.”
SEC Chairperson Mary Jo White yesterday said the agency should re-evaluate the "nature of exchange competition and the self-regulatory model in light of the evolving market structure and trading practices."
White's comments follow an increase in competition in recent years and after a series of tech glitches on exchanges. The regulatory nature of the operators has helped protect them from lawsuits, such as when traders lost money because of Facebook's botched IPO on Nasdaq (NDAQ).
Other exchanges include NYSE (NYX), CME (CME) and ICE (ICE).
IntercontinentalExchange (ICE -0.7%) near finalizes its takeover of NYSE Euronext (NYX -0.5%) after receiving a letter from the Chairman's Committee of Euronext Regulators saying "they are not minded to object."
Next up is approval from each national authority and regulator in each of the relevant European jurisdictions.
Qatar's sovereign wealth fund purchases NYSE Euronext's (NYX, ICE) 12% stake in Qatar Exchange for an undisclosed price. NYSE originally purchased a 20% stake for $200M four years ago. In the time since, the partnership has assisted in doubling the bourse's market cap along with MSCI's decision to upgrade the exchange to emerging market status from frontier.
NYSE sold the initial stake after regulators barred its merger with Deutsche Boerse last year, and is completing the sale as it preps its merger with IntercontinentalExchange.
NYSE Euronext, a Delaware corporation, was organized on May 22, 2006 in anticipation of the combination of the businesses of NYSE Group, Inc., a Delaware corporation, and Euronext N.V., a company organized under the laws of the Netherlands. The combination was consummated on April 4, 2007. NYSE...More