NYSE Chief Duncan Niederaurer on Relationship with NASDAQ's Bob Greifeld: "Like Patino and Calipari, They Fight Over Same Recruits"
New York Stock Exchange (NYSE) CEO Duncan Neiderauer spoke with FOX Business Network's [FBN] Charlie Gasparino about the recent announcement that Facebook chose to list on the NASDAQ over the NYSE. Neiderauer said Facebook “was just one deal” and that “we've gone from zero to sixty in the tech space in the last five years and we'll keep fighting.” Neiderauer also discussed the European Commission blocking the proposed merger between NYSE Euronext and Deutsche Boerse, saying, “There have been times where I thought did I misread the tea leaves on the DB deal,” and that “I must confess to you and the viewers it never occurred to me that the EU would come out with a completely contradictory definition of the market.” He went on to say, “We tried to do something great last year. We dared to do something no one had really tried in the industry. It didn't work. You lick your wounds and come back and fight harder the next day.” Highlights of the interview are below, courtesy of Fox Business Network. The videos can be seen here and here.
On the NYSE losing the Facebook listing to the NASDAQ:
“We were all disappointed. You'd like to win them all. If there's a silver lining to that, I'm proud of what we put forward. We viewed that as a great partnership and co-branding opportunity. I think that's a discussion we wouldn't have been in the frame on a few years ago. We made it a really tough decision for them. I'm really proud of what we accomplished in the tech sector last few years here, but that would have been a nice one to win no doubt about it.”
On what the NYSE offered Facebook for the listing:
“I won't get into too many details. It was a comprehensive proposal. There was a lot of common DNA between them running the largest social network and us running the largest business network. That's one listing. We've gone from zero to sixty in the tech space in the last five years and we'll keep fighting.”
On whether he thinks the NYSE had a legitimate shot at Facebook:
“Yes. It used to be easier for companies to choose their exchange. What we've tried to change the past four or five years is to say we may have abdicated that technology sector a few years ago, but let's get in there and fight hard for every one. The results are you see a LinkedIn, Yelp, ExactTarget, Pandora coming here. Track record is pretty good lately...We're at 60 percent of them year to date so we'll hang in there. That was just one deal. “
On whether the rivalry between him and NASDAQ CEO Bob Greifeld is personal:
“I think that's pretty much overstated. Someone gave me a great sports analogy the other day. It is like Patino and Calipari. They fight every day over the same recruits. They're fighting every day to win the hearts and minds of Kentucky basketball fan and we're going to fight really hard on the field but at the same time, we've got some common interests. The two of us run the largest exchanges in the US. We have an opacity problem in the markets. Forget the fragmentation. I think the bigger issue that we're only starting to talk more about is almost 40 percent of the market is getting to his exchange or mine. I think the two of us have a lot more in common we should be working on.”
On whether he ever sees a merger between the NYSE and NASDAQ:
“I think the regulators were pretty clear on that. When I say common interests, I mean it should be in the collective interests of regulated exchanges in this country to work with the regulators to figure out if there's a way to create a more level playing field. You can't create this equilibrium. What you have to think about is what were the intended consequences of the changes of this decade and what were the unintended consequences and are there ways to level the playing field.”
On whether he thought the regulatory environment would allow the Deutsche Boerse deal to go through:
“I really did. There have been times where I thought did I misread the tea leaves on the DB deal. We had done the calculus, we had been as intellectually straight up as we could be. We looked at precedents. There were clear precedents out there given the deals that had been approved over here. We looked at everything the EC and the EU had done in terms of defining the market and I must confess to you and the viewers it never occurred to me that the EU would come out with a completely contradictory definition of the market. And if they hadn't, the deal would have gotten approved. That's life in the big city. You move on and you gotta move forward…we got tripped up in a place where you wouldn't have predicted that no matter how much work you had done.”
On whether the NYSE would attempt a transformational deal in the next 3-5 years:
“So much changes in five years you would never say never. But if you said to me do I think we could do another transformational, complicated cross-border merger in the next 12-24 months, I think that's hard not only for us but for anybody in the industry right now. I just think whatever's going on around us in an industry that should scale globally, the regulators and the powers that be are saying maybe not right now, so it becomes our job to find other ways to grow intelligently. The LME is a good potential example of that, in-sourcing our clearing business is a good example, growing our technology business. What our industry has had a tougher time proving is can you grow organically? We all got bailed out by volumes for a while. No one is getting bailed out by volumes now…We tried to do something great last year. We dared to do something no one had really tried in the industry. It didn't work. You lick your wounds and come back and fight harder the next day.”
On whether he agrees with JPMorgan CEO Jamie Dimon on the average tenureship of CEOs being five years:
“I have simple credos on this. Every one of our jobs can be defined pretty simply: you leave every situation better than you found it. You accept that you're the right person for the job until you're not the right person for the job anymore and your job is to find the right successor. So, for example, I've said publicly before if we're in the process of migrating this company to where it's more of a very global company but one that's more of an applied technology company than one that's really just a markets company, I would be first to admit to you that at that time, there should be someone in my seat who knows how to run a truly global commercial technology business. I'm sure there are better people to do that than me. I don't know that transition. That transition is still in flight. But I think Jamie's point is a good one. And I would summarize it by this way, you're the right person for the job until you're not the right person for the job.”
On whether he thinks a flash crash could happen again:
“I think collectively the industry has taken steps that an event that severe shouldn't happen again because I think the circuit breakers alone prevent something like that from happening. But I think the bigger issue we have to focus on is, I'm still nervous and it's not just with the obvious self-interest, although that is certainly part of it, I am increasingly nervous about the markets becoming more opaque. We're not going to shut down the competition. The competition is here to stay. It would be nice if we were able to compete on a even playing field with the less regulated dark pools. I think it is a long process. There are things you could do that will strike many as a backwards step. I think what we all have to ask ourselves is, ‘And I think I'm obliged to stand up, right?' As we said to each other the other day, if a few of us will not defend the public markets who is? And I don't think I can stand up with credibility and say yes, we understand competition is here, it is okay that the equity market is going away, the OTC market. We just learned in the crisis opacity is not good for investors. It's not good for risk management. And here we are, taking the world's most transparent market on a track to being more and more opaque.”
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