Tuesday, December 05, 2006

Too hard to ignore!

UPDATE: After the original post today, NYSE ArcaNews learned about the SEC's approval of completing Hybrid's exciting, Phase III, rollout in January. Read all about this incredibly monumental news right here. To get a sense of the scale that Hybrid has already achieved, checkout this listing (Adobe Acrobat needed to read) of activated issuers. To be sure, numbers this big are hard to ignore!

Now that the European regulators have given the green light for NYX and Euronext to join forces, it's interesting to look at the competitive landscape as it collectively watches NYX Euronext dominate the global stock marketplace.

To be sure, NDAQ's mission to have a meaningful presence outside of the US continues to make for interesting fiction, but with inferior credit quality and an unwilling seller seems quite unlikely to materialize. And, occasional ideas that bulge-bracket firms can discover a core-competency in running bourses make for fodder in bidness rags.

But, today's remarks from Deutsche Boerse AG supervisory board head Kurt Viermetz illuminate some of the opportunity that lays ahead for NYX Euronext. He says, "Now for the first time, it seems realistic that Europe will continue to grow even if the U.S. is experiencing a marked slowdown." (Source: Article by Ragnhild Kjetland; Dow Jones Newswires; 12/5/06).

Clearly, part of the opportunity that the Euronext merger fosters is that NYX and Euronext, in many ways, can hedge each other's risk related to issues particular to a nation's currency, economics, politics, etc. So, in addition to diversifying revenue streams and cutting costs significantly, a trans-Atlantic business reduces risk for both NYX and Euronext.


On another note, it appears as though short interest in NYX has actually increased from 10/10/06 to 11/10/06. This information is available through Finance Yahoo (click here to see). Of course, the market's the market, but if you haven't noticed, the NYX stock has been acting a bit squirrly lately. Remember, as a stock goes higher, those that are short shares lose.

The loss continues to deepen until the short-seller (one who borrows shares to sell; artifical sellers in a sense) covers their short by buying back the shares they borrowed. They lose if the stock goes up since they have to buy it for more than they sold it for. Theoretically, a short seller has an unlimited loss potential. Anyhoo, those that are short a stock end up buying it back at some point. Often, a high short-interest can serve as a bullish indication since it indicates built-in demand.

Granted, the short data mentioned above is nearly a month old, and I don't have any more recent data. However, odds are, folks who shorted NYX could use some Rolaids about now (or some clown to downgrade the stock).


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