Nasdaq will be well-positioned to capture market share from the New York Stock Exchange in a post-merger market, according to executives speaking at the Reuters Exchanges and Trading Summit in New York.
The New York Stock Exchange has moved to acquire all-electronic Archipelago as part of a plan to introduce a 'hybrid' trading environment combining traditional floor-based trading with screen dealing. The approach contrasts with the strategy pursued by Nasdaq, which has followed up last year's purchase of the Brut ECN with a deal to acquire Instinet.
Seth Merrin, chief executive of peer-to-peer institutional network Liquidnet, believes the Nyse will struggle to match Nasdaq's scale economics while it strains to maintain the trading floor.
Says Merrin: "If Nasdaq wants to do it, they will cut the pricing and they will drive New York share to Nasdaq."
Nasdaq's recent experience of buying and integrating acquisitions will give the market a two year head-start on the Big Board, he believes.
It was a point emphasised by Chris Concannon, EVP for transaction services at Nasdaq in an address to the same conference. He says he expects the integration of Instinet will be "seamless", leading to the creation of a single platform within a year.
He says Nyse's efforts to maintain the floor will be an encumberance as the more liquid stocks are increasingly traded by computer, "with Nasdaq...sitting there trying to capture electronic liquidity in Nyse stocks".