http://xent.ics.uci.edu/FoRK-archive/may97/0486.html
This is the only page to show up in Altavista using the "+xent +eieio"
criterion. Memo to Rohit: you *still* need to read Cyberiad. As to the
significance of eieio, you'll have to wait for Rohit's next [VOID]post.
Now for a scrapbook piece from the New York Times on the Amex/Nasdaq
merger, with the stocks-as-used-cars analogy...
> The easiest way to understand the difference between the Amex and
> Nasdaq is to think of stocks as used cars. On the Amex system, everyone
> who wants to buy or sell a Buick shows up at a central swap meet. There,
> an auctioneer called a specialist helps keep things running smoothly,
> and might buy or sell a car himself if no one in the crowd is willing to
> do so. Nasdaq is like a series of dealerships, linked by a computer
> system, that buy and sell cars, trying to make a profit on each one.
Bit - Average number of shares traded each day last year:
NYSE -- 527 million
NASDAQ -- 648 million (though this may be inflated)
AMEX -- 25 million
Full article:
> Traders Waiting for the Fine Print on Merger
> By LESLIE EATON, New York Times, March 13, 1998
>
> NEW YORK -- Worry, optimism and a whole lot of bafflement swept over
> Wall Street Thursday as talks continued on the possible merger of the
> American Stock Exchange and the parent company of the Nasdaq stock
> market.
>
> Though both organizations trade stocks, they do so in ways so
> different that traders, investors and brokers find it hard to imagine
> how the two outfits can possibly mesh. And if they do not mesh, where is
> the benefit -- or the big deal?
>
> For people who work at the smaller American Exchange, that confusion
> has led to anxiety. "I'm apprehensive," said Barry Colen, a floor broker
> who has worked at the Amex for 22 years. "No one really knows right now
> what's going on. People losing their jobs is a good possibility -- it's
> always in the back of your mind -- but I'm trying to keep a positive
> view."
>
> Concerns like that may be the toughest barrier to the merger of the
> Amex, a once-powerful exchange whose size and influence have dwindled,
> and the National Association of Securities Dealers, which runs the
> high-technology over-the-counter market. Many people who work at the
> Amex are, in effect, its owners, because they own seats on the exchange.
> And they would have to approve any deal.
>
> Thursday afternoon, the Amex board met for three hours of "lively
> discussion," as one participant put it, and then Richard F. Syron, the
> exchange's chairman, and Thomas F. Ryan Jr., its president, met with
> about 300 members of the exchange. Syron asked them to keep an open mind
> about the plan, which he said would keep Amex as a separate subsidiary
> of the NASD; the association would put up about $200 millions to improve
> the exchange's technology.
>
> The mood at the meeting, which came about 24 hours after reports of a
> deal had begun to spread, was unusually reserved, said one trader who
> was there. "If they had done this in the morning, then it would have
> been ugly," he said. "But people had a day to think about it."
>
> Though the details of the plan remained hazy, some members left
> feeling positive about the link. "Speaking from the low end of the
> volume totem pole, it is going to add a lot to what we do down there,"
> said Joseph L. Kaufman, a long-time member of the exchange. "We will be
> able to lift ourselves by the bootstraps."
>
> Others said they would have to read the fine print of a more detailed
> agreement before making up their minds. "The concepts are absolutely
> fine," said Dennis J. Goin, chairman of Goin & Co., which has been a
> specialist firm on the exchange for 25 years. The deal is likely to be
> approved "if the details can be worked out within those concepts," he
> added. "But nothing is guaranteed. We have seen a lot of big mergers
> fall apart recently."
>
> It will be several months before the board votes on any arrangement,
> and the membership vote would come still later. Members of the dealers
> association do not need to vote on the merger, but would have to approve
> some changes in the rules that govern their organization.
>
> And some NASD members will oppose the combination, said Alan L.
> Davidson, a frequent critic of the association who runs a small
> securities firm in Jericho. "The whole thing is backward," he said,
> arguing that the deal would reduce competition, not encourage it. Other
> groups that must also support the merger if it is to succeed include
> regulators, brokerage firms and investors.
>
> The professional investors who manage many Americans' money through
> mutual funds and pension plans were profoundly surprised by the news of
> a deal. "This one came out of nowhere," said Andrew M. Brooks, a vice
> president and head of equity trading at T. Rowe Price, the big
> Baltimore-based mutual fund company. Like many of his peers, he
> expressed some skepticism that the two systems could do more than exist
> side by side -- which would not be much of a change from the current
> situation.
>
> The easiest way to understand the difference between the Amex and
> Nasdaq is to think of stocks as used cars. On the Amex system, everyone
> who wants to buy or sell a Buick shows up at a central swap meet. There,
> an auctioneer called a specialist helps keep things running smoothly,
> and might buy or sell a car himself if no one in the crowd is willing to
> do so. Nasdaq is like a series of dealerships, linked by a computer
> system, that buy and sell cars, trying to make a profit on each one.
>
> Many big investors prefer the auction system, which they believe leads
> to better stock prices and lower transaction costs. "We can transact for
> significantly less on the New York Stock Exchange and the Amex than on
> the Nasdaq system," said George Sauter, managing director of the
> quantitative equity department at Vanguard Group, which runs large index
> funds.
>
> What excites some investors is the idea that the Amex-Nasdaq deal
> might eventually bring about a kind of hybrid market, a highly
> computerized auction market that would incorporate the best of both
> systems.
>
> Such a market might constitute a true challenge to the New York Stock
> Exchange, they argue. "The NYSE was at the center of the universe 100
> years ago -- now the universe is virtual," said Harold Bradley, the head
> trader for the American Century Funds in Kansas City, Mo. "The exchanges
> have not wanted to go there, and now Nasdaq is talking about it."
>
> Regulators generally favor competition among exchanges, believing that
> competition encourages innovation and cost-cutting. Arthur Levitt Jr.,
> the chairman of the Securities and Exchange Commission and a former
> chairman of the Amex, was familiar with the merger plans, Wall Street
> executives said.
>
> The Big Board played down the potential competitive threat. "To the
> extent that this creates a more competitive environment that serves the
> investor, it is good for all markets and we applaud it," said Richard A.
> Grasso, chairman of the New York Stock Exchange.
>
> But in truth, the Big Board disdains most companies that trade on the
> other two exchanges, with the exception of some of the biggest
> technology companies that have stuck with Nasdaq. About 700 companies
> that meet the New York Stock Exchange's standards trade elsewhere.
>
> Last year, about 527 million shares traded on the average day on the
> New York Stock Exchange; almost 648 million shares changed hands on
> Nasdaq, which counts trading in a way that may increase its numbers. On
> the Amex, by contrast, trading volume was less than 25 million.
>
> What the Amex does have is a booming business in options, which give
> traders the right to buy stocks at certain prices and, in particular,
> some specialized products that allow investors to make easy bets on the
> overall direction of stock indexes.
>
> Nasdaq has been unsuccessful at building a similar business, but with
> the merger deal, its members "could eventualy trade options side by side
> with equities," said Bernard L. Madoff, the founder of a brokerage firm
> that bears his name. "I am in favor of having this opportunity."
>
> At many of the largest brokerage firms, executives declined to comment
> publicly about the proposed merger, pointing out that most firms had
> interests on different sides of the issue. At Salomon Smith Barney, for
> example, Deryck C. Maughan, one of the firm's two vice chairmen, is on
> the board of the New York Stock Exchange, while James Dimon, the other
> vice chairman, is on the NASD board.
>
> At Bear Stearns Cos., James E. Cayne, the president and chief
> executive, played down the importance of the proposed merger for Wall
> Street firms. "It's a nothing," he said. "It has zero effect on our
> business."
>
> Many amateur investors had no idea that the merger discussions were
> under way, much less how investors would be affected. But a few, like
> Michael Aronson, an account executive with a computer company, pondered
> some down-to-earth but unanswered questions. "I deal with Merrill
> Lynch," Aronson said, "and I'm concerned whether this will increase or
> decrease my commissions."
----
adam@cs.caltech.edu
You don't realize how little FoRK needs to be future-proofed? All it
will do is serve to show biographers that you were on the forefront of
many things. Just tell your biographers that and save them the
reading...
-- John Dobbin