From the Jan-Feb 2006 issue of Advanced Trading
Q: Will regional exchanges be able to compete with Nasdaq and the NYSE?
A: Nasdaq's acquisition of Instinet and the NYSE's merger with Archipelago look like they have thrown the knockout punch to the regional exchanges. But then again, maybe they are fighting Rocky Balboa. With the regional exchanges partnering with major brokers and having carte blanche on selecting technology from a wide array of vendors, the fans are chanting for them to get up off the mat.
The regionals need to find a niche that can provide them with a steady flow of business. At the same time, remaining on the cutting edge of trading technology ultimately will decide whether they can stay in the ring with the two trading behemoths.
There are a few things the regionals have to do to compete. First, they need to be nimble. Having the flexibility to adapt to what the customer needs - more important, wants - will be a decisive factor in capturing business away from Nasdaq and the NYSE. Second, they must carve out a niche for themselves, which will gain them the foothold they need to build a competing foundation for the future. Finally, they must have patience. Regional exchanges have to understand fully that time is needed for the dust to settle and the longer they stick around in the post-merger environment, the better off they will be.
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