With the IntercontinentalExchange stepping up its bid for rival CBOT, and the London Stock Exchange going after its Italian rival, few sectors have been hotter than exchanges.
In this Ratigan Report, Dylan speaks with Duncan Neiderauer, Co-President and Co-Chief Operating Officer of the of The New York Stock Exchange to ask what’s next for The Big Board.
Do you have an ambition to add more derivatives trading to this entity?
“I think we’ve already got a terrific options platform in the US,” replies Neiderauer. “And we’ve got a terrific options and futures platform in Europe.”
He adds “We have stated publicly what we’re trying to figure out in terms of the US futures business – which is clearly a missing element of our multi-product global footprint - is what’s the strategic imperative weighted against the cost of entry… we just have to weigh the importance of being in that business against the cost of getting into business.”
Still, the NYSE trades at a discount to rivals?
“People have a difficult time discerning one kind of exchange from another in my opinion,” says Neiderauer. “The exchange industry is certainly exciting right now. There’s a lot of consolidation in the industry right now, but… we’re unique in that we have a multi-product global footprint.”
He adds, “And we’re a cash and derivative exchange. Some of the exchanges that are particularly hot right now like the CME and Board of Trade; ICE, NYMEX – those exchanges all have one or two things in common. They’re all derivatives exchanges and that space has a lot less competition than the equity exchange space has. So people are still wrestling with what is an investment in The New York Stock Exchange – Euronext Group means. I’ve got a cash business, I’ve got an options business, I’ve got a futures business. It’s hard to compare this place to CME which only has a derivatives business or the LSE which only has an equities business.”
Will this floor be here 5 year from now?
“I’ll be here and the floor will be here. I promise you that,” replies Neideraurer.
Dylan asks the guys what they think of this interview?
Eric Boling believes The NYSE (NYX) is after derivatives exchanges but not an options exchange. He thinks they have an eye on New York Mercantile Exchange (NMX) and/or IntercontinetalExchange (ICE). He adds that he does not think the floor will be there in 5 years.
Dylan then asks if the NYSE trades at a lower valuation because it’s a harder asset to value?
Pete Najarian says quite possibly – and he believes NYSE will buy some derivatives exchange.
Guy Adami tells the panel don’t bet against ex-Goldman guys, and the heads of the NYSE are ex-Goldman guys. Adami thinks the NYSE will buy the New York Mercantile Exchangefor $165 a share.
Jeff Macke agrees it’s a complicated asset.
Trader disclosure: On June 21 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:Macke Owns (EMC), Bolling Owns (DIS), (ICE), (NMX), (T), Sugar; Bolling Is Short (FXI) And Owns (FXI) Puts; GE Is The Parent Company Of CNBC; CNBC Is A Service Of NBC Universal And Dow Jones
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