Monday, August 01, 2005

Arca in the Big Leagues!

In the spirit of summer and the great American pastime, thought it'd be fun to compare the AX/NYSE merger with the American League/National League merger at the turn of the last century.

In this analogy The American League represents Archipelago Holdings. So to understand where I'm coming from it helps to look quickly at the evolution of the American League and subsequently of Major League Baseball:

The American League developed from a minor league, the Western League, that aspired to major league status, was formed on January 29, 1900, expanded in 1900-1901 into major cities, and changed its name.

The Western League of Professional Baseball Clubs was a minor league baseball league founded in 1893, and focused in the Midwest. In 1900, league president Ban Johnson converted it into the American League and it achieved major league status in 1901.

To be sure, ArcaEx was a minor league venue during its first couple of years as a regulated stock exchange (and the first fully-electronic, regulated, stock exchange in the US). Jerry Putnam, AX's CEO is like Ban Johnson, the "Western League's" leader. Following this comparison, In 2005, Arca CEO Jerry Putnam and NYSE CEO John Thain converted AX to the NYX.

The NYX and NASDAQ make up the US equity markets the same way the American League and the National League make up Major League Baseball. The American League is considered the more progressive of the two leagues as the Designated Hitter instead of Pitcher batting shows.

The NYX will certainly be considered progressive as they shape the future of the US capital markets, and most likely the future of bourses throughout the digitally connected world economy.

Barclays' move of 20 iShares from AMEX to NYX is like Gallapagos turtles evolutionary migration. In the US capital markets, the migration pattern of the companies that live in this environment (read: are traded here) is towards deep pools of liquidity.

But don't take my word for it. Here's what
Lee Kranefuss, CEO of BGI's Intermediary Business says about this migration, "As a leader and innovator in the ETF marketplace, we're pleased to partner with ArcaEx, a leader and innovator in the securities market. ArcaEx's strict price-time priority order matching levels the playing field for all participants and has made it the market of choice for investors in many of the iShares products."

And finally, Dow Jones wrote this today -- a great article that goes deeper into the notion of companies wanting to be listed where there's liquidity.


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