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CNBC TRANSCRIPT: CNBC'S MARIA BARTIROMO SITS DOWN WITH DUNCAN NIEDERAUER, NYSE EURONEXT CEO, TODAY ON CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

WHEN: Today, Thursday, May 6th

WHERE: CNBC's "Closing Bell with Maria Bartiromo"

In a CNBC interview, CNBC's Maria Bartiromo speaks with NYSE Euronext CEO, Duncan Niederauer, today on "Closing Bell with Maria Bartiromo."

All reference must be sourced to CNBC.

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BARTIROMO: RIGHT NOW WE HAVE DUNCAN NIEDERAUER, NYSE CEO TO TALK ABOUT THAT ERRONEOUS TRADE DUNCAN IT IS GREAT TO HAVE YOU ON THE PROGRAM WE APPRECIATE YOU JOINING US

NIEDERAUER: YEAH ALWAYS NICE TO BE HERE

BARTIROMO: AS FAR AS WHAT YOU HEARD THE PROCTER & GAMBLE TRADE DID NOT HAPPEN HERE

NIEDERAUER: TO US ITS PRETTY SIMPLE THIS IS THE MARKET STRUCTURE WE HAVE ALL SIGNED UP FOR IN THE UNITED STATES WELL, WE HAVE TO ACCEPT THAT IT IS GOING TO HAPPEN IN PERIODS OF EXACERBATED VOLATILITY. SO AS FAR AS WE CAN UNDERSTAND YOU LOOK AT THE TRADES OF PROCTER & GAMBLE, TRIPLE M AND ACCENTURE, AND WHEN PERIODS OF VOLATILITY LIKE THAT IF THE MARKETS GOING TO GAP WE GO INTO SLOW-MODE NOW UNLESS WE THINK THAT IS PRE-HISTORIC THAT MEANS INSTEAD OF TRADING IN MILLISECONDS WE ARE GOING TO TAKE 30 SECONDS OR A MINUTE AND SEEK OUT LIQUIDITY WE ARE GOING TO GIVE TO THE AN OPPORTUNITY TO DISCOVER THE PRICE ON A BLOCK. WHEN THAT HAPPENS, THE OTHER MARKETS DON'T HAVE TO HONOR OUR QUOTE, THAT MEANS THEY DON'T HAVE TO WAIT FOR US TO REOPEN THE STOCK THIRTY SECONDS OR A MINUTE LATER, SO IT DOESN'T TAKE MUCH VOLUME TO MOVE SOME OF THESE STOCKS A LOT WE HAVE SAID TO THE OTHER EXCHANGES IN PERIODS LIKE THAT, IT IS NOT A TRADING HALT, ITS NOT AN HOUR BUT 30 SECONDS OR A MINUTE AND WAIT FOR US, THEY SAY NO AND THINK ABOUT IT, IF YOU HAVE A FEW MARKET SELL ORDERS AND THE NEXT BID IN A STOCK LIKE PROCTER & GAMBLE IS DOWN 20% OR 30% ON A THINLY TRADED SYSTEM, THAT IS WHERE THE STOCK IS GOING, BECAUSE THE COMPUTER DOES NOT HAVE A CIRCUIT BREAKER OR SPEED BUMPS.

BARTIROMO: THE COMPUTER IS LOOKING FOR LIQUIDITY

NIEDERAUER: RIGHT.

BARTIROMO: OF THEY DON'T HAVE LIQUIDITY HERE THEY WILL GO FOR WHERE IT IS.

NIEDERAUER: AND IN THE CASE OF ACCENTURE, IT IS GOING TO SOUND RIDICULOUS, BUT IT ACTUALLY TRADED DOWN TO A PENNY IN ONE OF THE THINLY TRADED ELECTRONIC VENUES AND MY GUESS IS WHAT WE WILL FIND WHEN WE LOOK AT THE VOLUME AND WE'RE STILL PULLING IT NOW IS THAT IT IS NOT A FAT FINGER PROBLEM OR HUGE VOLUME GOING THROUGH, AND YOU AND I COULD SEND A 1,000 SHARES TO SELL AT THE MARKET AND IF THERE IS NO BIDS ON THAT SYSTEM THE COMPUTER WILL FIND IT AND IT IS GOING TO TRADE WAY DOWN. ALL OF THE TRADES WILL BE TAKEN OFF OF THE TAPE. MY GUESS IS IF YOU WENT BACK AND REDID THE TAPE FOR THE TRADES THAT WE WOULD GUESS WILL BE TAKEN OFF THE DOW SHOULD NOT HAVE BEEN DOWN AS MUCH AS IT WAS DOWN BECAUSE ALL THAT VOLUME IN P&G DURING THAT PERIOD NONE OF THAT WAS HERE BECAUSE WE DIDN'T TRADE THE STOCK FOR 90 SECONDS.

BARTIROMO: SO YOU ARE SAYING THAT THE STOCK WAS CLOSED FOR 90 SECONDS

NIEDERAUER: FOR NINETY SECONDS HERE AND WHEN WE REOPENED IT, IT WAS MORE OR LESS IN LINE WITH THE PREVIOUS TRADE 90 SECONDS EARLIER, BUT THE STOCK WENT DOWN AND BOUNCED BACK IN THE MEANTIME

BARTIROMO: AND IN THAT 90 SECONDS IT WENT SOMEWHERE ELSE.

NIEDERAUER: YES, IT GOES SOMEWHERE ELSE, AND THAT IS THE WAY THAT MARKETS ARE WIRED, AND THEY DON'T HAVE TO HONOR THE QUOTE DURING PERIODS LIKE THAT AND I DON'T WANT TO GET TECHNICAL HERE FOR EVERYBODY, BUT THE POINT IS THAT IT DOES NOT TAKE MUCH VOLUME TO DO THAT. YOU COULD HAVE LITTLE VOLUME PRINTING THE STOCKS DOWN 20% TO 30%, BECAUSE THE COMPUTER IS LOOKING FOR LIQUIDITY, AND IF THE NEXT BID IS DOWN $5, 10, 15, THE COMPUTER DOES NOT DO WHAT WE WOULD DO, WE WOULD PAUSE AND WAIT, THE COMPUTER SAYS NO IT WANTS TO TRADE IN MICROSECONDS OR MILLISECONDS.

BARTIROMO: WHICH IS THE DIFFERENCE BETWEEN AN ACTION SCENARIO AND AN ELECTRONIC SCENARIO.

NIEDERAUER: RIGHT AND WE KEEP SAYING TO PEOPLE IS THAT WE TRADE AS FAST AS EVERYBODY ELSE WHEN IT IS SUITABLE WE ALSO RESERVE THE RIGHT TO SLOW THE MARKET DOWN WHEN WE THINK THAT IS APPROPRIATE, AND TODAY IS ONE OF THOSE DAYS.

BARTIROMO: NOW THE RULES AND TERMS THE OF CIRCUIT BREAKERS, NO MORE CIRCUIT BREAKERS AFTER 2:30 IN THE AFTERNOON, RIGHT?

NIEDERAUER: RIGHT. WHAT HAPPENED HERE IS, I GUESS BECAUSE THE MARKET, I THINK OUR FIRST CIRCUIT BREAKER IS JUST OVER 1,000 AND THE DOW 1,050 SO IT IS MEANT TO BE ROUGHLY AT 10%, IT WAS JUST HIT BRIEFLY AND THEN OBVIOUSLY THE MARKET SNAPPED BACK, BUT AT A CERTAIN POINT IN THE AFTERNOON, WE WOULD EITHER CLOSE FOR THE REST OF THE DAY OR IT DOESN'T MATTER AND THE MARKET CAN DRIFT AS LOW--, WE NEVER GOT TO THAT POINT, BECAUSE THE NEXT CIRCUIT BREAKER WOULD BE DOWN 20%, AND OBVIOUSLY ONCE PEOPLE REALIZED THAT SOME OF THESE TRADES WERE ERRONEOUS, AND IT WAS JUST BECAUSE WE HAPPENED TO BE REDISCOVERING THE PRICE WHILE OTHER MARKETS WERE TRADING AWAY I THINK THAT IS WHY YOU SAW THE MARKET SNAP BACK QUICKLY.

BARTIROMO: NOW IS IT FAIR TO CALL IT ERRONEOUS, WHEN IN FACT YOU ARE NOT YOU DON'T HAVE THE LIQUIDITY HERE AT THE NYSE, BECAUSE THE STOCK IS HALTED FOR 90 SECONDS SO IT GOES SOMEWHERE, IS THAT ERRONEOUS? IS THAT A FAT FINGER TRADE AS WE ARE HEARING IT?

NIEDERAUER: WELL, SO TO ME IT IS NOT FAT-FINGER TRADE --

BARTIROMO: THAT IS WHAT I AM ASKING.

NIEDERAUER: WELL, EVERY EXCHANGE HAS ITS OWN RULES, AND TYPICALLY IT IS SOMEWHERE BETWEEN 10 AND 20%, AND IF SOMEONE PUT A MARKET ORDER THAT THEY CAN REASONABLY THINK THAT WOULD BE FILLED AT A REASONABLE PRICE IN AND AROUND THE MARKET, IF IT GETS FILLED LIKE -- I THINK THAT YOU WILL SEE SYSTEM OF THE TRADES IN PROCTER & GAMBLE, YOU KNOW, BELOW A CERTAIN PRICE TAKEN OFF OF THE TAPE. THE ONES DOWN 30%, I DON'T THINK THOSE WILL STAND. AND OBVIOUSLY ACCENTURE TRADING DOWN TO A PENNY IS RIDICULOUS, AND SHOWS THE FLAWS OF THE THINLY TRADED ELECTRONIC MARKET, AND IT TENDS TO BE THE THINNEST IN PERIODS OF HIGH VOLATILITY.

BARTIROMO: AND TODAY THE PROBLEM IS THAT TODAY, WHEN YOU SEE A MARKET DOWN 700 OR 900 POINTS OR ALMOST 1,000 POINTS IS GOING TO DICTATE MORE BEHAVIOR.

NIEDERAUER: THAT IS THE PROBLEM, RIGHT?

BARTIROMO: YES.

NIEDERAUER: AND THAT IS WHY WE TRIED TO GET OUT VERY QUICKLY, THAT THERE WAS NO TECHNICAL PROBLEM IN OUR VIEW, I DO NOT THINK WE ARE LOOKING FOR A BANK WHO MISTAKENLY SOLD TWO BILLION WHEN THEY MEANT TWO MILLION. I ACTUALLY DON'T THINK THAT HAD ANYTHING TO DO WITH IT I THINK WE ARE GOING TO FIND THAT VERY LITTLE VOLUME TRADED IN THE 60 TO 90 TO 120 SECONDS WHEN WE WEREN'T TRADING THE STOCKS, BUT IT WAS JUST A FEW OFFERS BECAUSE PEOPLE WERE NERVOUS AND THERE WERE NOT THAT MANY BIDS IN THE STOCKS AT THE OA MARKETS.

BARTIROMO: YOU DON'T THINK THAT $39 TRADE WILL STAND?

NIEDERAUER: NOPE.

BARTIROMO: SO TELL ME ABOUT THE FLOW YOU SAW TODAY IN TERMS OF THE NEGATIVITY, IN TERMS OF THE SELLING GOING ON AND DO YOU THINK THAT IT WAS WORRIES OVER EUROPE?

NIEDERAUER: LOOK YOU HAD A FEW PRETTY WELL KNOWN PEOPLE COME OUT AND SAY THAT IT IS MUCH BIGGER THAN GREECE. IT COULD BE THE NEXT GLOBAL CREDIT CONTAGION AND SOME PEOPLE SPECULATE THAT THE CREDIT MARKETS ARE ALREADY LOCKING UP YOU I THINK PEOPLE WILL SAY, I HAVE WATCHED THIS MOVIE NOT THAT LONG BEFORE AND IS THIS 2008 ALL OVER AGAIN? WHETHER IT IS EXAGGERATED, TOO EARLY TO TELL, BUT PEOPLE CAME TO SELL RIGHT FROM TO GET-GO TODAY.

BARTIROMO: AND DOES IT FEEL LIKE TO YOU, THAT IT PERSISTS?I AM LOOKING FOR WHAT YOU HAVE IN TERMS OF THE EVIDENCE AND THE FLOW.

NIEDERAUER: WELL, SOMETHING I SAID A MONTH OR SO AGO IS THAT EVERY INVESTOR WE WERE MEETING DIDN'T APPEAR TO HAVE CONVICTION AND SEEMED LIKE WE WERE RANGE-BOUND, AND NO ONE I TALKED TO WAS AFRAID OF A MOVE UP OR DOWN OF 10 OR 20% WHICH MEANS THAT ONE WAS COMING. I THINK THAT UNTIL OTHER NEWS COMES OUT THAT WE CAN DIGEST, IT IS WHY WOULDN'T WE GET MORE OF THE SAME TOMORROW. I THINK THAT CORPORATE EARNINGS JUSTIFY A LEVEL, AND WE ARE GETTING CHEAP HERE, BUT I'M NOT THE MARKET STRATEGIST

BARTIROMO: TALK TO ME AGAIN ABOUT THE TRADE. IT WAS NOT JUST PROCTER & GAMBLE THEN. OTHER STOCKS. 3M, AND ACCENTURE.

NIEDERAUER: WE WILL GET MORE DETAIL AND DISSEMINATE IT TOMORROW, BUT I HAVE A FEELING WHAT WE WILL FIND IS THAT IN ANY OF THE STOCKS THAT WE SAID, WAIT A MINUTE, SLOW DOWN AND DISCOVER THE RIGHT PRICE AND GIVE PEOPLE A CHANCE TO COME IN ON THE OTHER SIDE, MY GUESS IS THAT THOSE ARE THE STOCKS COINCIDENTALLY WITH THE PROBLEM. ANY STOCK THAT KEPT TRADING, YOU WON'T FIND THAT DEGREE OF VOLATILITY. AS YOU KNOW, YOU GET A FEW STOCKS MOVING DOWN 20 TO 30%, THAT IS GOING TO MOVE DOW A LOT.

BARTIROMO: YOU ARE TURNING AWAY BUSINESS AND SAYING, HOLD ON, LET ME LOOK AT THAT. THE BUSINESS IS GOING TO GO SOMEWHERE

NIEDERAUER: YEAH, WE UNDERSTAND THAT. WE UNDERSTAND FOR THAT 60 OR 90 SECONDS, WE ARE NOT IN THE GAME. WE SAY TO THE OTHER ELECTRONIC MARKETS, THIS IS NOT A HALT WHERE YOU ARE UNCLEAR WHEN WE ARE GOING TO REOPEN. WE WILL REOPEN IN THE NEXT 60-90 SECONDS, BUT IT IS A BETTER MARKET, AND WE THINK WE ACTUALLY ACQUITTED OURSELVES APPROPRIATELY TODAY, AND WHEN YOU THINK ABOUT ISSUERS AND INVESTORS WE BELIEVE THEY WOULD AGREE AND THE ELECTRONIC MARKETS ARE FREE TO DO WHAT THEY WANT, AND WE WILL SEE TRADES FOR EXAMPLE ON OUR ARCHIPELAGO SYSTEM, AND THEY HAVE A DIFFERENT BUSINESS MODEL IN THE OTHER MARKETS, AND WE HAVE SAID TO THE OTHER EXCHANGES AND VENUES, DON'T TRADE THROUGH US, AND THE VENUE, WE WILL THINK ABOUT IT, BUT WE DIDN'T HAVE THE VOLUME THERE.

BARTIROMO: AND SHOULD THERE BE A DIFFERENT POLICING OR OVERSIGHT FOR THE ISSUE?THIS IS SEEMS LIKE SOMETHING THAT CAN YOU LEAVE IT TO THE MARKETS?YOU HAVE BUSINESS GO WHEREVER AND YOU HAVE AN ERRONEOUS TRADE?

NIEDERAUER: WELL, THE VIEW IS TO LEAVE IT TO THE MARKET, AND I THINK WHAT HAPPENS IS THAT THEN EACH OF THE EXCHANGES, AND EACH OF THE EXCHANGES HAVE TO HAVE THESE CLEARLY ERRONEOUS POLICIES AND WHAT THE S.E.C. SAID TO ALL OF THE EXCHANGES, WE UNDERSTAND, THAT IS ONE OF THE VAGARIES THAT THE MARKET SYSTEM HAS CREATED AND LET'S HAVE A CLEAR RULE. SO IN OTHER WORDS IF AN INVESTOR SELLS A STOCK, AND THEY GET AN UNEXPECTED OUTCOME THAT THE RULES OF ENGAGEMENT WILL BE THE SAME EVERY TIME. IT CAN'T BE 10% ONE DAY AND 20% ANOTHER DAY OH THIS WAS A DIFFERENT SITUATION I THINK WITH THE SEC ON THE HEALS OF SOMETHING LIKE THIS WILL PUSH AND EVERYONE WILL BE HAVE A CLEAR POLICY OF WHAT HAPPENS WHEN THIS HAPPENS.BUT THEY WON'T ASK US TO CHANGE OUR RULES.

BARTIROMO: ONE MORE QUESTION ON VOLUME, DUNCAN, 2 BILLION SHARES HERE --

NIEDERAUER: 2.5 BILLION.

BARTIROMO: WHAT DOES THAT TELL YOU WHEN YOU HAVE THAT KIND OF VOLUME IN A MARKET AS LOW AS IT WAS AND IS, AND WAS IT LARGELY INSTITUTIONAL TODAY? I WONDER IF THE RETAIL INVESTORS ARE INVOLVED IN THIS?

NIEDERAUER: WELL, IT IS MOSTLY INSTITUTIONAL THIS WEEK. I CAN TELL YOU FOR THE LAST TWO WEEKS IN THE DERIVATIVES BUSINESS WHICH IS LARGELY FOCUSED IN THE RATE SLEEVE, WE HAVE BEEN BREAKING RECORDS EVERYDAY, AND THAT IS CLEARLY INSTITUTIONAL VOLUME, AND WE KNOW IT IS NOT SUSTAINABLE, AND I WOULD FRANKLY LIKE TO SEE A CALMER MARKET WITH LESS VOLUME WHICH IS MORE STABLE FOR THE LONG RUN, BUT RIGHT NOW, YOU WILL SEE A LOT OF VOLUME, BECAUSE PEOPLE ARE NERVOUS.

BARTIROMO: WE WANT TO CONFIRM THE STATEMENT WITH CITIGROUP, WE AND THE REST OF THE FINANCIAL INDUSTRY ARE INVESTIGATING TO FIND THE SOURCE OF TODAY'S MARKET VOLATILITY, BUT AT THIS POINT, WE HAVE NO EVIDENCE THAT CITI WAS INVOLVED IN ANY ERRONEOUS TRANSACTIONS. EXACTLY WHAT YOU SAID AND SCOTT WAPNER REPORTING THAT THANK YOU FOR CONFIRMING THAT THAT IN FACT THE NYSE HALTS THE STOCK WHETHER IT IS PROCTER & GAMBLE OR 3M OR ACCENTURE, AND THE BUSINESS GOES SOMEWHERE GOING TO THE ELECTRONIC MARKETPLACE AND TRADING.

NIEDERAUER: RIGHT.SO, JUST WHAT ONE SMALL TECHNICAL POINT, BECAUSE PEOPLE HAVE A DIFFERENT DEFINITION OF HALT, IT SOUNDS LIKE WHO KNOWS WHEN IT WILL REOPEN, BUT TECHNICALLY, YOU HALT WHEN THERE IS NEWS THAT YOU DON'T KNOW HOW IS IT GOING THE BE DIGESTED. THIS IS SOMETHING THAT HAS BEEN IN OUR RULES SINCE WE PUT THE NEW MODEL IN PLACE IT SIMPLY SAYS IN PERIODS OF VOLATILITY, IT LOOKS LIKE THE STOCK WILL GAP DOWN, WE PAUSE AND SAY, TAKE 30 OR 60 SECONDS AND LET THE REST OF THE MARKET KNOW THAT A USUALLY REOPEN, IT IS ON A SIZABLE TRADE AS IT WAS IN CASE OF 3M AND PROCTER AND GAMBLE TODAY.

BARTIROMO: WHAT DOES YOUR GUT TELL YOU ABOUT TOMORROW MORNING?

NIEDERAUER: IT WILL BE FAIRLY UGLY TOMORROW MORNING, BUT WE WILL SEE.

BARTIROMO: THANK YOU, DUNCAN.APPRECIATE YOUR EXPLAINING IT TO US, AND JOINING US.

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