Professor Bainbridge...on law, politics, religion, culture & food

NASDAQ - NYSE Merger?

The WSJ reports that NASDAQ CEO Robert Greifeld approached the NYSE to discuss a possible merger of the two stockmarkets. CNN Money reports that the NASDAQ is denying the WSJ report "as having no basis in fact," which seems pretty categorical. Even if the WSJ report turns out to be true, you can count me as a skeptic that the deal would happen. Despite noises by SEC Chairman Donaldson about the need for a larger central stockmarket, the prospect of a merger between the NYSE and NASDAQ would raise very significant antitrust issues. A merger would also revive the debate over self-regulation by the exchanges, since NASDAQ has spun off its regulatory functions to a separate body but the NYSE refuses to do so. A merger also would make little sense from a business perspective. NASDAQ bungled its merger with AMEX so badly that NASDAQ reportedly now plans to sell AMEX back to its members. Trying to fuse the NYSE specialist-based floor trading system with the NASDAQ electronic market likely would meet the same end. The clash of cultures and technologies would be vast. It's very hard to imagine they could make it work.