NYSE Sale: What it Means for the Free Market
In a sign that nothing is exempt from the changing business structures of the digital age or the economic squeeze of the financial crisis, an Atlanta-based energy trader has brokered a deal to buy the New York Stock Exchange.
IntercontinentalExchange (ICE) will buy the stock exchange for about $33.12 a share in cash and stock, the New York Times reports.
The frenetic energy of the floor of the NYSE is iconic of the American ideal of free market capitalism. The hectic trading floor has been the pulse of the market for two centuries, but times are changing.
The NYSE, or the “Big Board,” has lost a lot of its importance in the last few years, as more and more trading is done online. The physical trading floor used to be where everything happened, but there’s no need for that now when just about everything can be done online.
“Exchanges have turned in recent years to mergers,” the Wall Street Journal explained, “to help offset intense competition and the relentless decline in trading commissions they pocket from brokers and other market participants.”
When I first heard that a company was buying the NYSE, insider-trading bells went off in my head, thoughts of large-scale stock price manipulation and the end of any appearance of propriety. But ICE is also an exchange, dealing mostly in agricultural commodities.
So this sale isn’t the end of capitalism, the offer and purchase of our American ideals, it’s just consolidation in a financially trying time. Regulators nixed a previous attempt at consolidation, but this deal is expected to go through because NYSE and ICE deal in different kinds of trades, not breaking antitrust laws. It will help the combined company compete in a globalized market, where having a hand in every pot will be an advantage.