Thursday, January 04, 2007

2007: A Year of Transformation

Today, Morningstar handed out its annual "CEO of the Year" award. The news here isn't so much who won, but the managers that were in the running. NYX's CEO, John Thain has demonstrated his brilliance as he inked a revolutionary deal with Archipelago Holdings that essentially rescued the storied institution from obscelence. Then he helped navigate the Atlantic to create a cross continental fusion that will serve as a pool of liquidity never before seen. The deal with Euronext is just the latest example of what happens when incredibly smart people work hard together to extract value from what well may be the most well known brand on Wall Street (and for that matter, on Earth).

Here's a blurb from the Morningstar news release mentioning Mr. Thain:

"In addition to Oberton, the finalists for Morningstar's 2006 CEO of th Year award included: John Chambers, chairman and CEO of Cisco Systems (Nasdaq: CSCO); Ken Chenault, chairman and CEO of American Express (NYSE: AXP); George Roche, chairman and president of T. Rowe Price Group (Nasdaq: TROW); and John Thain, CEO of NYSE Group (NYSE: NYX)."


CNBC's Mark Haines was mystified yesterday morning. He walked around the floor, on camera, pointing out booths that were staffed a week ago with people, and have now been replaced by computers. Haines remarked that things don't look good for traders. NYX shareholders might observe that things certainly look good for cost cutting initiatives.

If you haven't seen it yet, checkout this awesome NYX Hybrid blog for up to date information regarding this incredibly exciting, unique, and efficient system.


Yesterday, the SEC responded to Netcoalition's whining that NYX should be able to set prices for data feeds to websites such as Yahoo and Google. The argument is pathetic, at best, and helps illuminate the value of what happens at the New York Stock Exchange. To be sure, websites like Yahoo get eyeballs by "re-selling" data (read: raw materials) to consumers. The websites make money by generating these eyeballs (by attracting advertisers). However, for Yahoo's Finance section, the market data that's furnished by NYX is the lure for many consumers. If these websites can profit due to NYX's data, why shouldn't NYX be able to profit for supplying this data to the websites?

The SEC already approved the fee increases, but Netcoalition is flexing its political muscle to try to influence the SEC to interfere with the free market. Though data fees are ~10% of the overall revenue picture for NYX, it's an stream that could grow nicely. Buffet might call this part of the joy of being a (responsible) tollkeeper.

Things get interesting when you consider that Euronext operates under European regulations. Netcoalition's influence in Europe may not be quite what it is in the US. Just another example of the wisdom of management to diversify geographic and regulatory risk.


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