The Germans Are Coming! To Take Over the New York Stock Exchange


So much for all the hand-wringing that the end of American exceptionalism would be spelled M-a-d-e i-n C-h-i-n-a. After 219 years as the "citadel of American capitalism," The Wall Street Journal says the New York Stock Exchange is close to being acquired by Deutsche Börse AG, a German company that operates the Frankfurt Stock Exchange. If regulators approve the takeover, it would become the world's largest financial exchange — trading more stocks and futures than any other global rival, and more options than any U.S. exchange at a time when smaller, electronic upstarts have been quicker to go after emerging, lucrative kinds of trading. The new exchange would have a presence in fourteen European countries as well as the U.S. "A merger would potentially let customers trade stocks in New York, options tied to those shares in Paris and derivatives linked to them in Frankfurt," says the New York Times. So why is this bad for Wall Street rather than just another sign, like China owning U.S. debt, of the interconnectedness of global markets?

The Journal explains:

For New York, the move is symbolic of the city's fading dominance on the world stage as other countries are drawing investors directly to their markets. The move also is a recognition that securities trading today goes on at all hours and in all time zones, making the actual bricks and mortar of Wall Street far less important than before.

"New York is going to be important, but it's not the financial center. Capital markets are everywhere now," said Michael LaBranche, CEO of LaBranche & Co, the family-run firm that traded on the floor of the New York Stock Exchange for 87 years before it sold that part of its business to Britain's Barclays Capital in 2010.

Although this marks the NYSE's second European deal in five years (in 2006 NYSE beat out Deutsche Börse to buy Paris-based Euronext), one former trader likened it to the end of an era:

The NYSE "is not the same iconic place that it was in its heyday," said William Higgins, a 74-year-old retired NYSE trader, who still owns about 70,000 shares of the company. He recalls when the NYSE was a private club and traders gained entry by buying a "seat" that entitled them to do business there. "It doesn't mean life won't go on, but to those of us who have been called New Yorkers, to not have that air of sophistication, the sense that 'this is where things get done,' it's sad."

Did anyone else just get "The Way We Were" stuck in their head?

Germans in Talks to Buy Big Board [WSJ]
German Börse in Talks to Buy the Big Board [NYT]