Regulators and the exchanges are reacting to the May 6 “flash crash” with investigations and products designed to protect investors in today’s volatile markets. Yesterday, Nasdaq said in the third quarter of 2010 it will launch Nasdaq Volatility GuardSM, a single stock circuit breaker which will pause trading based on predetermined thresholds across all Nasdaq-listed securities.
It doesn’t seem that long ago when a beaming Terry Duffy, Craig Donohue, Leo Melamed, Jack Sandner, Jim McNulty and Dick Grasso rang the opening bell at the New York Stock Exchange on the day the Chicago Mercantile Exchange went public. It was Dec. 6, 2002 and was one of the most significant and successful initial public offerings of this century.
The Merc launched that day with an offering price of $35. That price would grow to more than $700 five years later and although the CME has lost about half its value since the December 2007 high, if you asked CME leaders in 2002 if they would take 1,000% growth in five and a half years they would probably have taken it.
The arctic chill didn’t freeze merger action in Canada today as the Toronto Stock Exchange and Montreal Exchange sealed their long-anticipated merger deal for 1.31 billion Canadian dollars. The combined exchange, TMX Group, will be based in Toronto with Montreal continuing to trade in derivatives and new products such as carbon emissions trading, according to the New York Times.
The Canadian deal is just the latest in a string of exchange consolidation action that includes Nasdaq’s purchase of the Philadelphia Stock Exchange in November and Eurex’s deal to acquire the International Securities Exchange, announced this summer. According to the Times, the Canadian exchanges came under pressure to merge in order to avoid a foreign takeover of the country’s financial markets.
