WASHINGTON -- New York Stock Exchange Chairman Richard Grasso said yesterday that he expects the world's largest stock market to convert to a publicly traded corporation in November to raise cash to buy an electronic trading network and invest in technology.
"I fully expect that you and I, at Thanksgiving, will be looking at the trading of a New York Stock Exchange stock," Grasso said in an interview. "I've not heard any significant internal opposition."
Grasso said he expects the NYSE to simultaneously sell stock in itself to the exchange's 1,366 members and to the public in an initial public offering on the Big Board. The stock exchange's board is expected to approve a conversion of the exchange into a public company Sept. 2, he said.
The 207-year-old NYSE is a nonprofit organization owned by its members.
The NYSE's move, which must be approved by the Securities and Exchange Commission, is prompted in part by competition from about a dozen networks that electronically trade shares of companies listed on the Nasdaq stock market, Grasso said.
Those private systems, called electronic communications networks (ECNs), account for about 30 percent of the stocks changing hands on Nasdaq, the second-largest U.S. stock market.
The sale of NYSE shares would open "sources of capital for technology investment and gives us scrip to acquire [an ECN]," the NYSE chairman said.
Grasso's comments suggest an about-face from recent NYSE plans. At a March news conference, Grasso said, "While there has been speculation that we're in the planning stage for our own IPO, I can tell you that it couldn't be further from reality."
Grasso also said yesterday that the NYSE will redouble its efforts to lure what he called the "big four": Microsoft Corp., Intel Corp., Cisco Systems Inc. and Dell Computer Corp. The companies are listed on Nasdaq but might shift to the NYSE because of a new rule that gives Big Board companies more flexibility to leave, Grasso said. The NYSE Rule 500 was approved Wednesday by the Securities and Exchange Commission.
"I won't declare victory until I see one of the big four trading on the NYSE," Grasso said. "I've heard time and again from them that they didn't like the fact they could get in but couldn't leave the NYSE."
The NYSE is home to many of the largest U.S. corporations, such as International Business Machines Corp., General Electric Co. and Exxon Corp.
The board of the National Association of Securities Dealers, parent of Nasdaq and the American Stock Exchange, has said it also is considering a stock offering for Nasdaq.
Under the proposal being developed by a board subcommittee, Nasdaq would sell stock to exchange members and listed companies, then to the public.
The NASD board is to hear an update of the industry group's internal study next week but is unlikely to vote on the plan, NASD Chairman Frank Zarb said.
Pub Date: 7/24/99