The New York Stock Exchange’s shrinking role in equity trading may do much to explain why IntercontinentalExchange Inc. is making a second attempt to acquire the market’s owner, NYSE Euronext.
As the CHART OF THE DAY depicts, the average number of shares traded on the NYSE has tumbled 33 percent since ICE and Nasdaq OMX Group Inc. made a joint bid to buy NYSE Euronext in February of last year, according to data compiled by Bloomberg. The drop is based on buying and selling for the previous 200 trading days.
The NYSE has a smaller share of trading in stocks listed on the exchange as well, as the chart shows. In the past 22 months, the 200-day moving average has declined by three percentage points, to 22 percent.
“The need for scale and growth put the NYSE in a corner that they didn’t really have the capability to get out of,” Bruce Weber, dean of the University of Delaware’s business school in Newark, said yesterday in an interview.
NYSE Euronext generated about half its revenue from the New York exchange and stock markets based in Belgium, France, the Netherlands and Portugal in the first nine months of this year. ICE, based in Atlanta, may take the European exchanges public after its $8.2 billion purchase of the company.
ICE’s earlier offer with Nasdaq OMX was withdrawn after NYSE Euronext’s board rejected the bid twice and the Justice Department threatened a lawsuit. NYSE Euronext had accepted a deal with Deutsche Boerse AG that was scrapped after European regulators objected.