Financial exchanges seem to be modeling themselves after Wal-Mart these days - offering every product imaginable at a fair price. Exchanges everywhere are reinventing themselves to become one-stop shops for everything from equities and bonds to futures and options.
Our cover story, "Resurrecting the Regionals," (p.38) outlines the regional exchanges' plans for growth under Reg NMS - and each exchange seems to be planning to introduce new products and move away from its former specialty. But it's not just the regionals that are transforming themselves.
Arca has just introduced options through PCX Plus and is moving forward with plans to trade bonds. Next, it plans to introduce futures. At a recent Security Traders Association conference, Jerry Putnam, CEO, Archipelago Holdings, said the options offering is just the "first of many steps in our commitment to offer an integrated solution." Putnam later told me that Arca's soon-to-be partner, the NYSE, has filed a rule change to allow Nasdaq stocks to trade on the Hybrid system. Imagine that? In the past, trading Nasdaq stocks on the NYSE floor was taboo.
Will exchanges become efficiently run, tech-savvy, one-stop shops? Or will the diversity result in muddled marketplaces that lack that special something? If the latter is true, you can be sure the circle of life will continue, and a new breed of boutique speciality exchanges will enter the marketplace in no time.
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