The Big Board is back, gone from a hoary home for Old Economy stocks to a safe haven in a raging storm. Since tech-stock prices started to fall last March, more than 800 companies have delisted from the Nasdaq, many because they failed to meet minimum financial requirements. Meanwhile, the NYSE is busier than ever: the number of shares traded on the exchange is up 19 percent from a year ago, and tech firms are noticing. Joining BMC at the Big Board this year are heavyweights E*Trade, IDT Corp. and Qwest Communications. “You go out with flashier guys,” says Catherine Kinney, a group executive VP at the exchange. “But you marry stable men.”
The structure of the NYSE is incentive enough for some companies to switch. BMC, for instance, considers the Nasdaq’s all-electronic trading system a turnoff. The NYSE employs specialists on its stocks, individuals on the exchange floor who maintain a level of liquidity and smooth trading that the Nasdaq’s critics say has been missing from its trading system. “If you’re a big institutional shareholder making multiple trades, you’ll save money on the NYSE,” says BMC’s Cox. “The pricing you get, trade to trade, will be better.”
For its part, the 30-year-old Nasdaq says recent defectors are simply seeking a new image. Companies like E*Trade “want to bask in comparison to the Merrill Lynches of the world,” says David Weild, a Nasdaq executive VP who heads its corporate-client division. “It has to do with trying to signal to the marketplace that you’re a more traditional kind of company in a market that they think is going to value traditional companies more highly.”
For years, the NYSE may have been its own worst enemy in the technology industry. Its listing fees and requirements, much higher than the Nasdaq’s, were often too onerous for technology start-ups. It won huge IPOs like Lucent, but it missed out on hundreds of smaller companies?like Dell and Intel, both of which are now valued in the tens of billions of dollars. Still, of the NYSE’s $16 trillion in total market value, nearly one third, $5.5 trillion, is invested in tech, media and telecom companies–an amount twice as large as the entire Nasdaq market.
In 1999, the NYSE offered an alternative to its traditional earnings standards: companies with a $1 billion market cap and $100 million in revenue are now eligible to be listed. And while the revenue standard marks a sharp departure, NYSE officials say the ceiling is high enough to keep out unstable companies. The exchange has also cut its listing fees in half, to $250 million.
The Big Board is aggressively courting foreign firms, too. Many of the leading overseas tech companies, such as Nokia and Nortel, are on the Big Board. So are European blue chips like German electronics giant Siemens and French media and communications company Vivendi. The developing markets have sent China Unicom, Petroblas from Brazil and Wipro from India. And while the Nasdaq has a slightly larger number of international companies listed, the NYSE has landed most of the heavyweights: its market cap in this segment is $5.5 trillion, compared with only $120 billion on the Nasdaq.
The NYSE’s edge in attracting international giants has also helped its efforts to form a global trading platform. This is an area where the exchange is working to thwart the Nasdaq’s continuing expansion. The Nasdaq recently purchased a majority ownership in Easdaq, a Pan-European stock exchange. But the Big Board has similar plans to grow, aiming to offer an auction model that respects the structure of local exchanges, while still offering liquidity globally. It’s an ambitious effort, but officials say plans are underway to implement the new platform next year.
In the meantime, the NYSE is angling to bring more technology companies into the fold. On its wish list are about 650 companies, including a few of the Nasdaq’s crown jewels. “If I could get [Cisco CEO] John Chambers to list before I retire,” says Kinney, “I’d have a hell of a party.”
