Van der Moolen, AmEx: The Latest Acquisition Talk

We are still waiting for the NYSE to announce the winner of the bid forVan der Moolen's specialist business. Van der Moolen announced a couple weeks ago that they were exiting the business; I have reported Lehman is the winner, but there has been no official announcement.

In addition, it's likely the NYSE will announce that the SEC has approved changes in the trading rules to make it easier for specialists to make money and provide more liquid markets.

Finally, there have been rumors for several days that an acquisition may also be announced; while the Nymex has been a persistent favorite, there has been considerable speculation that the AmEx may be a likely target for the NYSE. Why?

1) AmEx has approximately 700 listed companies, mostly small and medium size, in direct competition with NASDAQ.

2) The AmEx has a respectable options business.

3) The Exchange sits on valuable real estate a few blocks from the NYSE.

4) The cost may be attractive. Unlike the NYSE, the AmEx is still owned by seat holders. Prices for seats have been rising: the last sale was $370,000. There are roughly 870 seats, so we are talking perhaps $350 million at the current bid. The recent acquisition of the Philadelphia Stock Exchange is one factor in the rising seat prices; speculation the AmEx may be sold is another.

5) The cost of running the AmEx could be almost completely removed if its operations were integrated into the NYSE.

Stay tuned.

Questions? Comments?