Nancy B King

When I teach, whether it is reading, writing, and spelling to dyslexics or about the stock market and how to determine quality stocks, bonds, and mutual funds, my goal always is to make a positive difference in the individual’s life through his or her increased skills and knowledge. Teachers often receive little fed back after the fact. The following excerpt is from an email that made my day yesterday:

“Greetings Nancy, I am one of your former stock market class students (2x actually) and am still proud to this day that my partner and I in your class won the stock market game one year in the adult division. What I really want to tell you is my daughter’s personal finance class (high school), her group also won their class stock market game. Just want you to know, your teachings are being passed on down to the next generation!”

Today as I work on the Stock Exchange section for my stocks class, I am lamenting the transformation of the New York Stock Exchange (NYSE). I miss the NYSE I knew before it became a publicly traded corporation. It was a not-for profit organization with 1,366 firms/individuals who owned their seats on the Exchange; the floor was abuzz with trading activity, and a mass of paper lay strewn underfoot. For me the mystique is nearly gone. The NYSE is just another corporation struggling to keep up with the times and its competition.

What changes has the NYSE undergone?

• 2005  The NYSE acquired Arca—an electronic exchange (The Archipelago, an electronic communications network (ECN), was the Los Angeles and the San Francisco exchanges combined. These two exchanges had come together, eliminated their trading floors, and become an all-electronic exchange.) The acquisition of this all-electronic exchange allowed the NYSE to offer a market in options and futures and to compete with the Nasdaq’s automated transaction market.

• 2006  The NYSE became a publicly traded corporation (NYX) on the New York Stock Exchange to raise money for acquisitions and modernization.

• 2007  The NYSE merged with Euronext to become the NYSE Euronext group that manages the New York Stock Exchange and Euronext’s exchanges in Amsterdam, Brussels, and Paris. The NYSE Euronext became the first global (United States and Europe) equities exchange.

• 2008  The NYSE acquired the American Stock Exchange. This exchange is known as the NYSE Amex.

What exchanges make up NYSE Euronext group in the United States and in Europe?

NYSE Euronext is the umbrella exchange. It is the combined U.S. NYSE and the European Euronext (Belgium, France, Netherlands, Portugal, London) exchanges.

Sub-Exchanges

1. NYSE Amex: NYSE’s U.S. exchange for listing small and mid-sized companies
NYSE Alternext = NYSE Amex but in Europe for listing small and mid-sized companies

2. NYSE Arca: NYSE’s U.S. all-electronic trading platform for fast execution with anonymous market access

NYSE Arca Europe = NYSE Arca but in Europe with the all-electronic trading platform for fast execution with anonymous market access

3. NYSE Liffe U.S: NYSE’s new U. S. futures exchange that offers a range of precious metals contracts

NYSE Liffe = NYSE Liffe U.S. but in Europe. Liffe  (London International Financial Futures  Exchange) was first acquired by Euronext in 2001 before the NYSE-Euronext merger. It is an exchange for trading European derivatives, such as swaps, commodities, and currencies in Paris, London, Lisbon, Brussels, and Amsterdam. It is the second-largest derivatives trading business by value.

4. SmartPool: It is an European dark pool for block trading by institutional investors who want to trade promptly, anonymously, and in bulk with reduced market impact in 15 European countries and the four NYSE Euronext European markets.

My White Board Illustration of the above organization

The newest change in the NYSE

The newest development on the NYSE scene has just been announced. The Deutsche Borse is merging with NYSE Euronext. The Deutsche Borse owns the Frankfurt Exchange, the largest German exchange with locations in Spain, Luxembourg, Switzerland, and Czech Republic. It will own 60 percent of the New York Stock Exchange through its ownership of the NYSE Euronext group. This merger will result in a powerhouse for trading stock, bonds, commodities, and derivates throughout Europe and the United States.

When this merger is complete, will the NYSE exist in name and façade only?

I’m departing the financial Dark Pools for Harry Potter and the Deathly Hallows, Part 2. Daughter is buying the tickets online, going early to stand in line for our seats, and buying dinner afterwards at Sacks. Who can beat that deal! It must be Mother’s Day!

I’m converting the topics from my book Stock Market Investing Made EZ into a stand alone, online class. Now that I’ve gotten into doing what I said I would never do—updating the book—I’m really enjoying researching and digging around the internet. This week I’m working on the section about stock exchanges. The exchange scene has significantly changed in the past 10 years: the NYSE, the Electronic Communication Networks (ECNs), the dark pools.

Want to know what a Dark Pool is? It is when institutional investors buy and sell very large blocks of stocks anonymously, unseen by the market. Here it is a great whiteboard explanation from NPRs Market Place! (I tried to embed it here for your convenience but was unsuccessful)

Unemployment June 2011: The Scariest Jobs Chart Ever Is Now Scarier Than Ever

How could Jeffrey Immelt, CEO of General Electric and Chairman of President Obama’s Council on Jobs and Competitiveness, stand before the Chamber of Commerce Conference as the keynote speaker and tell large and small businesses they should stop complaining about government and just boost the recovery by hiring new workers (whether they can use them or not). His company, GE, has decreased its number of employees by 40,000 since 2008. In 2008 they had 327,000 employees and in 2011 they have 278,000.

After having read Physics for Future Presidents: The Science behind the Headlines and having gone to the Space Center in Houston a month or so ago, I have had fun tracking the Atlantis Flight on Google Earth this afternoon.

I am having a crisis with the word crisis. We have had the health care crisis, the obesity crisis, the hunger crisis, the unemployment crisis, the underemployed crisis, the banking crisis, the underbanked crisis, the housing crisis, the stimulus crisis, the price of gasoline crisis, the Greece debt crisis, and the Casey Anthony trial crisis. Now, it is the Debt Ceiling Crisis.

Language matters. As a consequence of  hearing the word crisis in the title of each leading 7 to 14-day news cycle topic, we  will become immune to the true meaning of crisis—reaching a point of no return.  We like those in the past will tune out the boy calling “Wolf.” We will entirely miss the event or condition that actually signifies reaching a point of no return.

In the meantime, let’s have some creativity for the name of our weekly or bi-weekly crisis—deadlock, standstill, impasse, dilemma,  predicament, imbroglio, muddle, or mess.

For now, I’m off to tackle my garden-weed crisis—oops, my garden-weed threatened takeover.