Wednesday, November 29, 2006

JP, Why'd You Do It?

This morning JP Morgan chose to take the sell-side-can't-get-NYX-right spotlight from the clowns with calculators at Raymond James (read: Raymond James downgraded NYX back around $70 most recently).

Today's comments from Morgan are cited in this Dow Jones news release:

NYSE Group Cut At J.P. Morgan; Integration Risks Cited


J.P. Morgan cut its rating on the NYSE Group, Inc. (NYX) to neutral from overweight, saying that while it continues to believe that the company will be a global exchange winner, clawing back lost U.S. equity market share and continuing to make acquisitions, it feels the positive news is already priced in the shares.

In addition, the broker told clients that although NYSE management has done a great job with the integration of the Pacific Exchange, it sees the Euronext integration as being complex.

"It could be subject to both regulatory and integration setbacks," J.P. Morgan cautioned.


It's the second to last paragraph that underscores how JP Morgan is missing the boat. How can they cite NYX's integration of the Pacific Exchange when that was an acquisition made by Archipelago way before NYSE and AX merged.

Integrating systems and platforms while broadening the breadth of investment products available to the public, while simoltaneously fostering the fairest, fastest, and most innovative boarse infrastructure in the world is a core competency of NYX and it talented and proven management team.

Also, integrating a centuries-old open outcry floor model with the world's most innovative electronic bourse (AX) should be noted by Morgan. In case they've not heard, Hyrbid is on the way and the art of integration will be demonstrated once again by NYX.

Chuck Berry's prophetic question comes to mind. "JP, Why'd you do it?!"

Wednesday, November 15, 2006

Full Steam Ahead!

This morning it was announced that DB has pulled their bid for Euronext. To be sure, the NYX short sellers scrambled to mitigate their losses as Hybrid takes hold and the management team at NYX flex their business accumen and cut costs significantly (making ~500 employees redundant).

CNBC's Kramer finally woke to NYX's potential as he demanded that his viewers buy at least one share of NYX. While his price projections (he called for NYX to be $250 stock with earnings of $10/share, but didn't specify his time frame) may not be rooted in EVA, cash flow projections, IRR, or other metrics, his sentiment is clear -- get long NYX because they're going to lead the global capital markets.

The nonsense that Lucchetti wrote about months ago related to the DB bid again seems to be nothing but a waste of ink, precious real estate in Wall Street's favorite rag, and a extraordinary waste of readers time. The outcome, which has been written about often here at NYSE ArcaNews, is that NYX and Euronext are merging (subsequent to a final shareholder vote on 12/19). The NYX will compete on a global basis and be able offer unprecedented liquidity, technology, structured products, and breadth of revenue streams.

It's been fun to watch the open interest in the NYX 115 2008 options. When I BOT mine, my contract was the only one in the overall open interest. Interest in this option has risen dramatically as 2008 gives plenty of time for Hybrid to launch, Euronext to be inegrated, and other dramatic catalysts (maybe Sarbanes-Oxley repealed, acquisitions, competitors stumbling, NYSE Arca picking up steam in its listings and winning share from classic early-stage lister Nasdaq, etc.).

The Curb (AMEX) is still out there and its connection with SIAC is interesting. There are certainly synergies between AMEX and NYSE and it should be interesting to see AMEX's plans unfold as consolidation in exchange-land continues (and NYX leads the charge).

It's interesting to watch the NYSE evolve -- and it's especially fun to watch the centuries old NYSE transform itself into an Archipelago!

Happy Thanksgiving to my loyal NYSE ArcaNews readers. NYX shareholders certainly have much to be thankful for this year.

Monday, November 06, 2006

NYX Firing on All Cylanders

Things seem to be humming along with NYX's initiatives across the board.

Hybrid is firing on all cylanders, and the Euronext vote is around the corner. The stretch towards the end of 2006 should see the beginning of an era in capital market structure never before seen.

In addition to NYX's margin expansion and revenue diversification, NYSE Arca is quickly emerging as an alternative listing venue for companies that want to be listed on the world's most recognized and sophisticated bourse. Click here to read more about NYSE Arca as a listings venue.


As ETFs continue to grow incredibly popular for investors, NYX is facilitating their growth as the number of listed ETFs has grown dramatically at the NYSE. Click here to read more about this.

There are many reasons for this transformation from mutual funds to ETFs, and here are a few advantages that ETFs have over mutual funds:
* Investors can use options on ETFs to reduce risk (decrease beta, etc)
* Investors don't pay distributed capital gains taxes in ETFs (mutual fund holders share the tax liability created by fund holders who redeemed their shares during the year)
* They are typically significantly less expensive than mutual funds (especially when used in a fee-based account)
* The benchmarks that are typically represented in ETFs outperform their actively-managed counterparts in similar sectors/caps/styles.

So, near-term catalysts like Hybrid and the Euronext vote should indicate that NYX is executing their well-thought out plan to lead the transformation of the global capital markets.
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