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In Memoriam: Abafim Abimbola: NEW YORK -- The New York Stock...

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In Memoriam: Abafim Abimbola:
NEW YORK -- The New York Stock Exchange, its once-sterling reputation dented by scandal, suffered a different sort of hit Monday when the rival Nasdaq Stock Market announced that six Big Board-listed companies would list their shares on Nasdaq as well.
The dual listings by big names such as brokerage Charles Schwab Corp. of San Francisco and tech giant Hewlett-Packard Co. of Palo Alto will end a decades-long system in which companies have listed their shares only on the NYSE or Nasdaq, never both.

The other dual listers will be Houston energy company Apache Corp., San Jose-based software firm Cadence Design Systems Inc., Calabasas mortgage lender Countrywide Financial Corp. and Deerfield, Ill.-based drugstore chain Walgreen Co.

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All the firms will retain their three-letter NYSE ticker symbols when they list on Nasdaq in the next few weeks.

To lure the companies, Nasdaq agreed to waive listing fees, which can run into the tens of thousands of dollars, for one year.

Experts said individual investors were unlikely to reap immediate benefits, such as getting better prices when trading stocks.

Some observers said it was too soon to tell whether dual listings would have any significant long-term effect.

"It's not going to totally change the structure of the U.S. equity market overnight," said James Angel, associate finance professor at Georgetown University.

"It's an incremental advance."

But if additional NYSE companies agree to list on the all-electronic Nasdaq, the practice could herald the beginning of a long-predicted shake-up in the U.S. stock market.

If shares increasingly change hands by computer, the NYSE's human-based trading system -- in which stock trades typically are made face to face on the exchange floor -- might decline in importance.

At a minimum, observers said, the dual-listing announcement represented a significant public relations coup for Nasdaq and a blow to the NYSE.

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Though the two markets battle each other for listings, the NYSE has long held the upper hand.

Even during Nasdaq's boom years, dozens of companies deserted Nasdaq every year for the perceived higher prestige of the Big Board.

Only one small company -- Aeroflex Inc. -- has ever fled the NYSE for Nasdaq.

Now Nasdaq is attracting "name" companies without having to persuade them to abandon the NYSE.

"It could be the beginning of a small crack in the NYSE's dike," said Junius Peake, a finance professor at the University of Northern Colorado.

"A statement has been made in which people are saying they're willing to take on the NYSE."

Big Board officials downplayed the significance of the move.

"There's nothing new here," NYSE spokesman Robert Zito said. "These companies have all been eligible to trade on multiple markets for years and years and years."

Nasdaq, which suffered when the bear market trounced its once-highflying stocks in the last few years, is trying to take advantage of the NYSE's recent scandals, including the uproar over former Chairman Richard Grasso's pay package, to pitch the dual-listing concept, experts said.

"This is a significant move by Nasdaq to try to capitalize on the stock exchange's embarrassment over Richard Grasso," said John Coffee, a Columbia University law professor.

In theory, dual listings eventually could pay off for investors by increasing the number of brokerage firms that trade the stocks, thus increasing price competition.

For example, an investor trying to sell a stock could find more potential buyers and get a higher offer price for the shares.

It also could mean faster execution because more trades would be done electronically.

"Investors are always helped when competition is enhanced," said Edward Knight, Nasdaq's general counsel.

Said Brian Humphries, a Hewlett spokesman: "There's no downside to doing this. Competition is healthy, and we believe we will provide our investors a choice of venue on which to trade, allowing investors to engage in electronic trading."

Dual listing could make a big difference if the Securities and Exchange Commission were to change a rule that has had the effect of driving trading to the NYSE. A stock already can be traded on exchanges other than the one on which it's listed, but the so-called trade-through rule requires that trades be sent to the market with the best price.

Because of its vast pools of buy and sell orders, that market often is the NYSE.

But not always.

Sometimes a better price can be found on Nasdaq for NYSE-listed stocks.

About 13% of daily NYSE trading volume now is handled through Nasdaq.

There is an electronic trading link between the exchanges that's designed to guarantee that an investor's order is executed at the best price, no matter where the stock is listed, but critics have complained that the system is inefficient.

Nasdaq hopes the SEC will revamp or repeal the rule. It contends that some traders want their trades executed more quickly and would be willing to pay a slightly higher price to do so.

Big institutional investors such as pension funds -- which have been critical of the NYSE's operations -- have said they were intrigued by the prospect of dual listing.

Nasdaq shares gained $1.03 to $11.35 in OTC Bulletin Board trading Monday.

Shares of the dual-listing companies were mixed: Hewlett, Walgreen and Schwab rose; the others fell.

Posted February 22 2024 at 7:35 PM

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