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NYSE shareholders back Euronext deal

Vote to buy exchange group is overwhelming. Still, electronic rivals threaten the stock trading operation.

December 21, 2006|Walter Hamilton | Times Staff Writer

NEW YORK — The Big Board is getting bigger.

Shareholders of the New York Stock Exchange's parent company voted overwhelmingly Wednesday to purchase a European stock exchange company in a landmark $14.6-billion deal that creates the first transatlantic stock market.

The acquisition of Euronext was approved by 99.7% of NYSE Group Inc. shareholders. The deal is seen as the first step in a planned global expansion.

"In many ways, we'll be the most powerful exchange in the world," NYSE Chief Executive John Thain said at a morning shareholder meeting where the results were announced.

Shares of NYSE Group dropped $1.17, to $102.19.

Euronext shareholders voted in favor of the deal Tuesday. European authorities and the U.S. Securities and Exchange Commission must give final approval but have given preliminary support.

Amsterdam-based Euronext operates stock markets in Belgium, France, the Netherlands and Portugal and a futures exchange in Britain.

The stock value of the companies listed on the exchanges involved in the deal is about $26 trillion. The two market groups trade about $100 billion worth of stocks and other securities each day.

Many of the 100 or so shareholders at Wednesday's meeting were former seat holders whose stakes were converted to stock when the NYSE became a publicly traded company in March.

Harry Levine, who retired in 2004 after 43 years as a floor broker, voted for the deal with mixed feelings.

Though excited by NYSE Group's business prospects, he was saddened by the changing nature of the exchange, particularly the increasing use of electronic trading, which is thinning the ranks of floor traders.

Levine's son was laid off by a floor-trading firm in March.

"It's progress, but it has taken out the human element," Levine said. "To me, it's sad because I spent my life doing it, and [the job] I did is no longer viable."

For individual investors, the deal could lower trading costs and make it easier over time to buy and sell stocks around the globe.

U.S. investors have poured money overseas recently as foreign markets produced better returns than the U.S. market.

From a business perspective, the deal is driven by NYSE Group's desire to cut costs, branch into fast-growing securities such as futures and cater to investors who want quick and easy trading in markets around the world.

The two companies plan to shave $275 million in costs over three years, primarily by combining their electronic trading platforms, and boost revenue by $100 million.

Despite its prospects, NYSE Group faces serious threats to its core stock-trading business from electronic-trading competitors, said Jamie Selway, managing director of New York brokerage firm White Cap Trading.

The NYSE handled 68.2% of trades in its own listed companies in November, down sharply from the 80% it averaged in the late 1990s.

"They got the Euronext deal done, which is good for them," Selway said. "But there are still fundamental challenges in their core business that have to be dealt with at some point."

About 75% of eligible NYSE Group shares were cast. Final voting results will be released today.

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walter.hamilton@latimes.com

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