The NYSE: A Thousand Cuts

摘要

After the New York Stock Exchange ousted Chairman and Chief Executive Richard A. Gras-so on Sept. 17, it didn't take long for business to heat up at the stock-trading venue Liquidnet. As founder Seth Merrin puts it, institutional traders suddenly felt freer to bypass the Big Board and kick business his way with Grasso no longer around to hassle them. Since then, the three-year-old New York firm, which matches buyers and sellers via the Internet, has more than tripled its volume. Says Merrin about the NYSE: "Just because you own 80% of the trading volume now, doesn't mean you are going to keep it." Could this be the Big Board's Waterloo? Without Grasso's hardball tactics to discourage traders from going elsewhere, players from tiny Liquidnet to Street mainstays such as Charles Schwab, Fidelity Investments, and Citigroup are starting to eat the NYSE's lunch. Large institutions, unhappy with the lack of anonymity, speed, and sometimes honesty of the NYSE's human specialists, are sending more trades to electronic alternatives. And brokerage firms, less shy about angering the NYSE's brass, are boosting their profits by matching trades from customers in-house. "Under Dick Grasso, the NYSE's power to regulate was used as a competitive weapon," says Jerry Putnam, CEO of electronic exchange Archipelago, where trading volume has jumped by a third post-Grasso. "The old regime used to threaten fines and intimidate members to maintain market share."