If true, Twitter deciding to list on the NYSE (NYX, ICE) is a blow to the Nasdaq (NDAQ), which bungled the Facebook IPO last year, and was stung this year after a technical failure caused a shutdown in trading for several hours.
Twitter's IPO announcement sets off a horse race between the NYSE (NYX, ICE) and Nasdaq (NDAQ) over who's going to get the listing. "That's going to be one of the most visible transactions when they come out," says NYSE Euronext EVP Scott Cutler. "We will still compete for it. It is not determined yet."
For NYSE, the deal would help the exchange boost its allure among young tech companies, while for Nasdaq, it offers a chance to get past the Facebook gaffes from last year.
"We would hope we have a great shot at Twitter," simply says Nasdaq EVP Bruce Aust.
"I stressed the need for all market participants to work collaboratively - together with the Commission - to strengthen critical market infrastructure and improve its resilience when technology falls short," says SEC chief Mary Jo White after meeting with officials from the NYSE (NYX, ICE) and Nasdaq (NDAQ).
Next steps for the exchanges, says the SEC, is a comprehensive action plan to fix the systems for the securities information processors ((SIPs)) which were at the core of the Nasdaq trading halt.
One hot topic for exchanges are "kill switches" - the SEC is asking for rule amendments allowing exchanges to shut down trading in the event of technological failures.
CME Group (CME -0.9%) will delay by three weeks until September 30 the launch of trading at CME Europe, according to a memo sent to exchange members today. "We are currently working very closely with regulators in order to achieve both recognition and a successful CME Europe launch," goes the memo, without elaborating in any more detail.
CME Europe is the group's first full-fledged overseas exchange and is expected to challenge Eurex (DBOEY.PK +0.1%) for business, as well as take on IntercontinentalExchange (ICE -1%) whose acquisition of NYSE Euronext (NYX -0.8%) is set to close this year.
Nasdaq (NDAQ) has taken responsibility for the three-hour trading outage last week, saying it was caused by a software bug and other technology issues.
"Our performance is unacceptable to our members, issuers and the investing public," the exchange said.
The problem occurred when NYSE's (NYX) Arca was unable to connect to Nasdaq's data feed, which eventually led to the overloading of the latter's servers. However, Nasdaq CEO Robert Greifeld specifically said he's not blaming Arca for what's now being called the "flash freeze."
Bank and brokerages are reportedly discussing how to prevent another outage, including giving a non-exchange entity responsibility for managing feeds.
A rumored spat between Nasdaq (NDAQ) and the NYSE (NYX, ICE) is a distraction, reports Reuters, citing SEC sources. They're instead focused on why a system for distributing stock quotes wasn't robust enough. "There's a lot of finger-pointing as to what caused the SIP (Securities Information Processor) to go down," says a source, "but bottom line, the SIP really shouldn't be going down."
Both exchanges have been asked to provide a minute-by-minute timeline of what went down and the heads of the exchanges are expected to meet with SEC chair Mary Jo While on September 12.
The acquisition of NYSE Euronext (NYX -1.3%) is a major catalyst to earnings growth, says Wells' Chris Harris, resuming coverage of IntercontinentalExchange (ICE -1.8%) with a Buy and $210-$230 price target. "While ICE is a much-loved name that is up materially YTD, we don't think investors fully appreciate the benefits of the NYX deal."
His 2013/14/15 EPS estimates of $8.24/$10.70/$13.00 assume the merger closes by the end of this year.
The trading halt was preceded by connectivity problems between the NYSE's electronic stock market Arca and Nasdaq's Securities Information Processor (SIP), which collects and distributes stock prices to the market.
The big question is whether those problems were because of faults at Arca or with the SIP.
The rumored merger of BATS Global and Direct Edge is a done deal as the two announce a definitive merger agreement with terms undisclosed. The marriage is expected to close in 2014 H1, subject to regulatory approvals.
The combined exchange would be the 2nd largest market operator - behind NYSE (NYX, ICE), and ahead of Nasdaq (NDAQ).
BATS Global Markets (BATS) is reportedly in advanced negotiations to merge with Direct Edge Holdings in an all-stock deal that would create the second-largest exchange operator in the U.S. in terms of shares traded, putting it behind the NYSE (NYX) but ahead of Nasdaq (NDAQ).
BATS CEO Joseph Ratterman is expected to become the head of the new firm, while Direct Edge boss William O'Brien would become president. The companies plan to continue operating all four of their U.S. stock-exchange platforms after the merger.
Both firms are profitable, with BATS earning EBITDA of $101M in 2012.
Direct Edge's owners include KCG Holdings (KCG), Goldman Sachs (GS), Citadel and the International Securities Exchange. Those of BATS include KCG also, as well as Bank of America (BAC), Citigroup (C), Credit Suisse (CS), Deutsche Bank (DB), JPMorgan (JPM) and Morgan Stanley (MS).
CME Group is expected to make a play for Paris' thriving wheat futures contract after IntercontinentalExchange (ICE) acquires it as part of the NYSE Euronext (NYX) takeover.
A spinoff of all continental European cash and derivatives products is among the promises ICE has made to regulators in exchange for their approval of the NYSE purchase.
CME is already the dominant agricultural commodity brokerage and the move would further cement that position. "The CME would rub their hands together with glee if they could get their hands on the Matif contract," says one broker.
SEC boss Mary Jo White said yesterday that she will push to implement proposed rules that will hold exchanges, clearing agencies and certain "dark pool" trading venues more accountable for preventing disruptions to trading. The rules would add testing requirements and safeguards for the software involved.
White made the comments following the three-hour outage on the Nasdaq, which was caused by a technical problem. The company has reportedly identified "connectivity" issues with rival NYSE Arca (NYX) as a major factor.
In the existing regulatory model, exchanges rely on voluntary guidance known as "Automation Review Policies" to maintain security and stability.
Goldman Sachs (GS +0.7%) mistakenly issued a number of orders into the stock-options market just after the market opened, temporarily roiling prices in a number of contracts. The orders were placed on securities with ticker symbols beginning with the letters H through L, and traders suspect an algo gone wild.
Many of the trades are likely to be canceled. "Neither the risk nor the potential loss is material to the financial condition of the firm," says Goldman.
Among the exchanges investigating are the NYSE (NYX), the CBOE, and the Amex.
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