You can trade anywhere these days. So why not demand a bribe?

Fresh from their success sinking the CMDX, the CDS clearinghouse founded by the Chicago Mercantile Exchange and Citadel Investment Group, the Wall Street oligarchs are now insisting upon tribute from the New York Stock Exchange.

The Big Board is selling a “significant stake” in its U.S. futures exchange, NYSE Liffe U.S., hoping to drum up business after seeing its revenue and profit plummet in the third quarter. It’s worked before: NYSE Euronext sold off a stake of its NYSE Amex Options platform last year, quickly boosting its market share. And while Citadel and the CME tried—and failed—to go it alone, the Intercontinental Exchange built a dominant CDS clearinghouse with the backing of nine banks.

As it turns out, the American Stock Exchange still exists and it’s being acquired for $260 million in stock by NYSE Euronext.

The deal had been rumored forever. One person very familiar with the American Stock Exchange told DealBreaker: “Finally! This deal should have happened 15 years ago.”

After the jump, read the full press release.

Former NYSE chair Dick Grasso recently left a voicemail for Charlie Gasparino. Know what it said? “Happy holidays.” Why did this seemingly innocuous message scare the fuck out of Charlie, who takes no shit or prisoners, and who is known for yelling at/cutting off/berating his colleagues on air (especially Joe Kernen, but let’s face it, that guy has it coming) and leaning so far up into the camera that you feel as though he’s about to grab you by the collar, shove you up against the wall and demand to know where his “fucking money” is*? I don’t know, apparently it has something to do with a book he wrote calling the Grass-man a midget and implying that he has illegitimate children up and down the Eastern Seaboard. “It was a little scary,” Gasparino told Page Six. But looked himself in the mirror and said, “You’re fucking Charlie Gasparino, you don’t take no shit or prisoners, make the call.” And it turned out they “had a perfectly nice conversation.” Don’t you love happy endings between two boys from the old neighborhood?

Thick-skinned [New York Post]

*BTW, we’d like to see more of this dynamic style from CNBC’s on air-talent, especially from Trish Regan and Mark Haines, who would be naturals.

It looks like it’s Merrill Lynch that is nabbing New York Stock Exchange chief executive John Thain.

The New York Post has just reported that Merrill is expected to announce that it has hired Thain to replace ousted CEO Stan O’Neal sometime this afternoon. Zach Kouwe, whose reporting has scooped the world on this story, attributes it to “people familiar with the matter.”

An NYSE board meeting is scheduled for 2 p.m. today and an announcement could come after the market closes, sources said. The move is a huge coup for Merrill and board member Alberto Cribiore, who has led the search for a new CEO after O’Neal resigned on Oct. 30.

Kouwe also reports that Citi wanted Thain but he chose the smaller, more narrowly focussed Merrill instead. The Post describes this as a “snub” for Citi. NYSE Chief Operating Officer Duncan Niederauer is expected to land the top job at the exchange.

Citi Snub: Thain Going To Merrill [New York Post]

Update 12:32: The Wall Street Journal files its report also: “John Thain, CEO of NYSE Euronext, has agreed to take the top post at brokerage house Merrill Lynch & Co., according to a person familiar with the matter.”

Update 12:39: Congratulations and thanks to all our readers who voted in this morning’s reader poll, which correctly called that John Thain would leave the NYSE for Merrill. We’re constantly gratified by the amazing accuracy of our polls, which have predicted everything from the level of Fed rate cuts to this news. We like to think we have the best informed, most intelligent readers but it’s nice to see you guys prove it over and over again.

Update 12:50: So what happened to Blackrock chief Larry Fink, the man many thought would eventually be Stan O’Neal replacement? Did he turn the job down? Was the board’s enthusiasm for him exaggerated? Some fear of subprime contagion? Loyalty to Blackrock?

Update 1:06: CNBC’s Charlie Gasparino says that Fink was offered the job, but he spooked the Merrill board by demanding a full-accounting of Merrill’s subprime exposure. This led the board to go in another direction, perhaps out of fear that Fink might turn down the job if the subprime exposure was too bad.

Update 2:01: The Journal confirms that the stock exchange will name
Duncan Niederaueras its new CEO.

Let’s assume for a moment that the rumors (and CNBC’s Bob Pisani) are right and the board of the New York Stock Exchange is holding an unscheduled meeting right now. Views about what is happening are divided, so we figured we’d go to the experts: our readers. What do you think is going on at the NYSE board meeting today?

Rumors are rampant that the New York Stock Exchange will begin an unscheduled board meeting in about ten minutes. The eleven o’clock meeting is widely believed to have been called so that NYSE chief executive John Thain can announce he is leaving the exchange.

CNBC has reported that speculation on the floor of the exchange has Thain leaving to go to either Merrill Lynch or Citigroup, both of which recently ousted their chief executives. Our sources are leaning heavily toward Merrill. And over at the Financial Times, they are just now reporting that Thain isn’t even a contender for the top spot at Citi.

There’s also a minority view that the board is meeting to discuss a new acquisition, perhaps of the NYMEX.

Thain absent from Citi’s shortlist [Financial Times]

The New York Stock Exchange has released it’s calendar for 2008 and 2009. Get excited because in 2008 there will be two extra trading days! It’s a leap year, giving us an extra day in February. And there is one less holiday on the schedule—this year we honored the death of Gerald “stagflation” Ford by refusing to work. Unless a former president dies this year, we should have one more day of trading.

Leap years tend to outperform other years, with particularly strong Augusts. Of course, leap years are also presidential election years, which may have more to do with market performance than that extra day in February.

Click chart for larger version.

NYSE Euronext Holidays & Hours [NYSE]

Sadly, the amount of activity on the famous floor of the NYSE is dwindling. A space once filled with the roar of brokers and clerks on the floor buying and selling stocks has been largely replaced with computerized trading . From it’s peak of over 3,000 members, the crowd has tapered off to about 1,700.

Dealbook reports this morning: “The decline in activity at the exchange’s headquarters at 11 Wall Street is palpable. Tourists no longer queue up by the hundreds to survey the floor from the visitors’ gallery or watch the ceremonial ringing of the opening and closing bells. Excluded for security reasons since 9/11, they can only wander by the building that has long symbolized the heart of American commerce.
If they could get inside, they would see that a once-vital organ has been reduced to a reliable backdrop for financial shows on cable.”

In the coming weeks, the exchange will close down two trading areas it added decades ago. Dealbreaker is wondering what the NYSE plans to do with this extra space. After tossing around some ideas – here’s what we came up with:
- A Starbucks or two. The floor of the NYSE might be the most expansive area that doesn’t have a Starbucks.
- A food court, featuring a Cipriani, Robert’s Steakhouse
- A dry cleaning service – have you seen the pit stains under those guys arms?
- An apprenticeship booth manned by Tim Sykes

You guys are a creative bunch, surely you must have some ideas what the NYSE can do with the added floor space.

New York’s Shrinking Exchange Floor [Dealbook]
Next to Downsize on Wall Street? The Exchange Floor [New York Times]

We’re not sure why but for some reason this afternoon we found ourselves wondering about trading collars and curbs. This infographic from the New York Stock Exchange is just about the clearest illustration of when the NYSE will put the breaks on a plummeting market. (Or a skyrocketing market, but that’s unlikely to be an issue today.)

The circuit breakers don’t kick in until there is a 1,350 point drop in the Dow Jones Industrial Average. The “circuit breakers” halt trading for varying periods of time, depending on when the DJIA hits the trigger.

Under the tutelage of Chief John Thain, the floor of the New York Stock Exchange has (d)evolved into a) one big computer and b) a tourist attraction for the Colonial Williamsburg-going set in New York for the week. Specialists have been rendered unnecessary, unless they’re giving tours, selling souvenirs. Accepting this shift in climate, LaBranche & Co. officially put itself on the block today. The largest trading firm on the Exchange, LaB’s stock is down nearly 20% this year and said yesterday that it will post a second-quarter loss due to a “substantial” write down of its specialist business (its business on the AMEX has already been sold).

Fortress Investment Group is said to have a possible interest in LaBranche, which has a market cap of about $486 million. Bid on a piece of this living museum today!

Earlier: NYSE Jumps The Shark


Trading Places [New York Post]

The New York Stock Exchange has banned Michael Moore, saying he is not welcome in the exchange building on Wall Street, CNBC is reporting. The controversial film-maker was scheduled to be interviewed by CNBC’s Maria Bartiromo at 3 PM today.

Moore’s latest film “Sicko” is critical of the health care system in the United States, and he has been calling on investors, pension funds other institutional investors to divest from health insurance companies. Some publicly traded health insurance companies are listed on the New York Stock Exchange.

Last week a Lehman Brothers analyst wrote a client note describing the film as an attack on the U.S. health care system. “Michael Moore’s latest documentary, ‘Sicko,’ to be released June 29, might trigger resentment against insurers,” the note said. “The film directly aims at the U.S. health care system and the insurance industry and suggests a government-run system is the best alternative.”

Update: We’re told that Moore may now be unbanned. Still no word on what powerful force inside the exchange is issuing and possibly retracting these orders.

This was very clearly one of the most surreal moments of BX: The Opening. Amidst the crowd of traders, there appeared a man with a shock of white hair in a double breasted gray suit. And that man happened to be Tom Wolfe.

After the jump, cast your vote for what Wolfe was doing at the Blackstone opening.

Would you believe us (Charlie Gasparino) if we (he) told you that John Thain:

- Had a letter addressed to him from floor trader Kevin M. Flanders that said “Thank U [sic] John Thain for ruining all of our careers?”
- Knows he isn’t well-liked by the trading community
- Once ate a panda
- Was accompanied by a security detail on a recent visit to the floor
- Just wants to dance
- Is “openly mocked for his stiffness”
- “Makes Al Gore look animated”
- Is allergic to bees
- Often finds that his attempts at humor fall flat because, “given his rigid demeanor, traders simply can’t tell whether he’s kidding” or not
- Has a 22” cock

Crunch Time [Trader Monthly]

Everyone on the Big Board mass email knew that the day would come when the floor of the stock exchange would be turned into Colonial Williamsburg; that time is now. With almost two-thirds of the bodies being cut and the survivors pretty much standing around twiddling their thumbs (floor traders handle only 18% of trades now, versus 86%, pre-electronics), the logical thing to do was to start giving out tours to the public and dressing in drag. The Post reports that “storied floor” has become a major hotspot for out-of-towners, and a good way for employees to pass the time.

Head tour guide is John O’Shea, chairman and CEO of Westminster Securities, who, by finally “realizing his career-long goal of qualifying as a floor broker” earlier this year, is now bestowed the great honor of escorting couples from Peoria dressed in Hawaiian shirts and BluBlocker Clip-Ons(tm) around the living history museum. “We can now bring down four people at a time, when in the past it used to be just two,” he told the Post. “There’s more free space.” No word on the rumored plan to widen aisles even more to accommodate 6 large tourists astride.

Jonathan “Nat” Niles, living in denial, sees it differently: “If the exchange is not careful, this place will become just a tourist attraction.”

Traders Say NYSE Floor Still Hot Venue— For Tourists [NYP]

There may be some tension in the NYSE Euronext cafeteria. Financial Times reports that Jean-François Théodore, the French John Thain (he’s like JT but wears a red smoking jacket and says ‘ménage à trois’ instead of ‘threesome’), i.e. chief executive of the Eurnoext, was paid less than a fifth of what Thain earned last year.

While Thain enjoyed a nice $9.36 million (€6.9m) paycheck, Théodore was awarded a measly €1.33m ($1.81m): barely enough to buy barely enough to buy a nice pair of frogs’ legs. Lest you chalk this up to an example of Americans working harder and taking less vacations (and paying for their health care) than Europeans, and being rewarded accordingly, note this: the Euronext was more profitable than the NYSE last year, with net profits of $504m versus a paltry $205m.

There’s a chance that Théodore will have an additional €200,000 thrown his way, following the Euronext’s shareholder meeting next week, if the board recommends that shareholders reward him for his “vital contribution” to the merger but at this point, we’d advise Theo (can we call him Théo?) not to accept anything less than $9.36 million (€6.9m). €200,000 is just insulting.

Théodore earns fraction of Thain at NYSE [FT via DealBook]

As most of you probably know, John Thain brushed off the claims of a Goldman analyst today that Reg NMS will “erode the transatlantic stock exchange group’s market share and benefit its main US rival, the Nasdaq.” Tossed them to the wind; knocked them down; scoffed; said, “Whatchu talkin’ about, Willis?” Now, these responses make sense if you’re going to buy the party line that the New York Stock Exchange is, as they say, in compliance with the group of rules known as the Regulation National Market System, and believe the Goldman analyst, Joshua Carter, to be on the right track.

But, as John Francis Carney III has pointed out (like the crazy homeless man who shouts at you when you walk into your building every day) in the past, there’s a good chance that the NYSE isn’t in compliance with Reg NMS. Yes, JFC3 has said, these rules that allegedly help rather than hurt the NYSE—excuse us, NYSE Euronext—are not even being followed by the small elves that push buttons on the corner of Broad and Wall. Or, at the very least, we cannot get any firm confirmation from the NYSE or the SEC that NYSE is in compliance. But why would that be? Why would just John Thain allow this to happen? And why did Erin Burnett show up to the set today walking with a limp? The answers* may surprise you.

They may not be in compliance with Reg NMS,* but the NYSE does care about regulating outright criminals (for the most part). Paul Starsia, a biotech analyst was served with an 18-month ban from the industry yesterday for (“allegedly”) doing one of those things that’s frowned upon by regulators where you have a secret brokerage account and use it to trade against your own recommendations.

Most recently with Standard & Poor’s, Starsia did his best work at Swiss American Securities. It was from his activity there that Starsia racked up a smorgasbord of charges, including his failure to disclose that secret account, his violation of “no-trade window” rules, and the whole profiting from the strategy of betting against his own reccomendations. Starsia reportedly accepted the ban without admitting or denying the allegations.

Look for his tell-all on a video offering from thestreet.com in 18.

*Or maybe they are and for some reason just aren’t willing to say they are. Hey, NYSE, you sure were quick to respond when we reported on your exeuctive’s air travel. Give us a ring, okay? It’s not Cabo but it’s…something.

NYSE Slaps S&P Analyst [New York Post]

Why can’t we get a straight answer on this? Last week we reported that a source familiar with the market regulation work at the Securities and Exchange Commission had told DealBreaker that the New York Stock Exchange is still not in compliance with government regulations meant secure the best price available for stock traders. The NYSE had said that it would not meet a deadline for compliance in March but little has been reported or disclosed since. Neither the NYSE nor the SEC will comment on the record or off the record about the matter.

It’s this kind of thing that makes us turn on the little red alert lights here at DealBreaker. If the NYSE is fully compliant wouldn’t it be eager to get that news out to reporters making inquiries? The refusal to comment seems to speak volumes here, and those volumes seem to be titled We’re Still Not Complying.

Four days after our original story ran and still nothing from the regulators or the exchange, despite repeated requests for information. We know that other business journalists are looking into this now so it’s only a matter of time before this story spreads.

Earlier: NYSE: Still Not Complying With Reg NMS? [DealBreaker.com]

The New York Stock Exchange is still not in compliance with government regulations meant secure the best price available for stock traders, a source familiar with the SEC’s regulatory work says. The National Market System regulation—known as “Reg NMS” to regulators and securities industry insiders—requires stock exchanges to provide smaller traders and individuals with access to the same price quotes offered to institutional traders, and to execute trades at the exchange where the best price is available. Compliance requires a heavy reliance on electronic trading.

Shortly after the stock markets plunged in late February, the NYSE requested a second extension of its NMS compliance deadline from the SEC. In January the deadline had been pushed back from February to March. The NYSE gave scant explanation for its failure to meet the March deadline, and the SEC denied the request for the extension.

The NYSE still is not meeting the Reg NMS requirements, the source says. Neither the NYSE nor the SEC could be reached for comment. Our source says the next step may be an SEC investigation or enforcement action against the NYSE.

Earlier: REG NMS: Time Is A Luxury The NYSE Does Not Have [DealBreaker]

Duncan,

I’m starting to get what you’re saying about these damn jabronis. Viva la hybrids!

Best,
H