March 8, 2006

NY Stock Exchange to ring bells as goes public

By Megan Davies

NEW YORK (Reuters) - The New York Stock Exchange will ring
the opening bell in honor of itself on Wednesday as it goes
public, ending a 213-year history as a member-owned club and
eyeing further growth in the booming exchange sector.

The NYSE, which is the world's largest stock exchange, on
Tuesday sealed its purchase of electronic rival Archipelago
Holdings Inc. and combined the two companies into a new
company, NYSE Group Inc., worth more than $10 billion.

NYSE Group shares' historic trading debut has attracted
strong investor interest with other exchanges soaring after
listing, but no significant "pop" is expected as the deal has
been factored into Archipelago shares that have surged to $65
from about $17 when the deal was unveiled last April.

"People are acting like this is a new issue but it is going
to be one-for-one so I don't see any pop or decline in the
stock -- it will just continue trading under a new symbol,"
said William Power, who held a seat on the Exchange.

Shares in CBOT Holdings Inc., operator of the No. 2 U.S.
commodities exchange, surged nearly 50 percent in a market
debut last October while Chicago Mercantile Exchange Holdings
Inc. stock, the largest U.S. futures exchange, rose nearly 23
percent from their offer price in 2002.

Analysts, however, are keenly awaiting guidance on where
the exchange heads now to evaluate its growth prospects.

This landmark deal could herald in a new, more aggressive
culture for the NYSE, which had been run as a members' club
since formation in 1792 under a tree on Wall Street, as it will
now be answerable to shareholders and analysts.

Shareholder demands could put pressure on the NYSE, also
know as the Big Board, to change the way it does business to
compete against its nimbler rivals like the Nasdaq Stock Market


NYSE chief executive John Thain, who has steered the NYSE
public since joining from Goldman Sachs in 2004, has promised
an exchange combining a human auction system with an electronic
trading platform.

But analysts have questioned the long-term viability of the
traditional open outcry trading floor in favor of cheaper,
electronic trading, and also want to pin down whether Thain
will open earlier than the current 9:30 a.m. start.

There has also been speculation about whether the
newly-listed NYSE Group will cut jobs and costs in order to
save money, while raising trading prices on the floor.

The Big Board is also expected to take more aggressive
strides in pushing into other assets other than equities and
Thain has made clear his desire to participate in the ongoing
consolidation of exchanges in Europe.

Bringing Archipelago into its fold gives the NYSE positions
in trading options, corporate bonds and Nasdaq shares but some
industry experts think the exchange could go further, through
buying a derivatives exchange.

For the NYSE's 1,366 seat holders, the end of mutual
ownership marks the end of an era.

"It's bittersweet," said James Rutledge, a long-time seat
holder . "When you've identified yourself as a member of the
New York Stock Exchange for 33 years, to lose that is
disappointing to some degree."

The seat holders are swapping their seats for a 70-percent
share in the new company and a $300,000 cash payment. They can
sell shares in a secondary offering expected within weeks.

Thain will ring the opening bell to start trading. He will
be joined by Archipelago boss Jerry Putnam, who is taking on
the position of president & co-chief Operating officer.