NEW YORK - The New York Stock Exchange has agreed to buy the American Stock Exchange, ending a once intense rivalry that began in colonial times when brokers traded in outdoor markets.
Both exchanges have battled for corporate listings and bragging rights since the early 1900s, with their trading floors just a short walk away from one another in Lower Manhattan. Newspapers around the country all listed the stock swings on the nation's two dominant markets, until investors began paying more attention in the 1990s to technology issues on the upstart Nasdaq Stock Market.
Their evolution took a very different path — with the Big Board forming NYSE Euronext to become the world's first trans-Atlantic exchange. The Amex, unable to compete like it once did, began to focus on trading options and other financial products.
The Amex, which once hosted the likes of big-name stocks such as The New York Times Co. and The Washington Post Co., now trades generally smaller companies that are often too illiquid to meet the standards of bigger rivals.
NYSE Euronext said it would pay Amex's seatholders, who are generally members that trade at the exchange, $260 million in stock. In addition, they would receive more stock after the sale of the Amex's landmark building on 86 Trinity Place — an art deco building it moved into in 1921 that sits only blocks away from the World Trade Center site.
The deal will give NYSE Euronext a second U.S. license for an option exchange. It would make the NYSE the nation's third-largest player in the $1.3 trillion options marketplace.
The NYSE has been looking to move further into the options business, and will meld the Amex's floor into its own. Electronic trading of Amex-listed options and ETFs would be done on the NYSE's Archipelago platform.
Shares of NYSE Euronext rose $2.33, or 3.3 percent, to $73.40 in after-hours trading after it closed Thursday at $71.07.
Though many had long expected the Amex to be swallowed up by a larger rival, traders who have worked on Wall Street for decades were still stunned. It marked the latest exchange to go silent in the past few years, following the lead of names like the West Coast's Pacific Exchange.
"You have such a heritage that's involved in this. In a time of need, I think all that heritage — people are willing to throw the books into the fire," said Robert Smith, chairman and chief executive of Smith Affiliated Capital in New York, who has worked on Wall Street for 50 years.
"I think all you can do is have fond memories but you cannot do anything to avoid the book burning," he said. "The exigencies of the present demand you just obliterate the past."
The Amex has roughly 470 employees after cutting more than 360 last year. It was not known how many of the floor traders, specialists and others would lose their jobs once the firms they work for consolidate operations at the NYSE.
The acquisition is the first big move by NYSE Chief Executive Duncan Niederauer, who stepped in when John Thain left in late 2007. He said the deal will realize annualized run rate cost synergies of over $100 million within two years of closing.
"We looked across the ocean first with Euronext and then we looked in our own back yard," said Larry Leibowitz, the head of U.S. products at NYSE. "It was a good fit.
For Amex CEO Neal Wolkoff, the agreement caps a yearlong review of potential deals including a proposed initial public offering led by the New York-based investment bank Morgan Stanley.
The announcement to traders was emotional.
"I saw tears," Wolkoff said. "People misted up. I think people think of this as something they've been waiting to see happen. It's very moving."
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