On Friday, The Securities and Exchange Commission (SEC) has announced their approval for the Intercontinental Exchange (ICE), which is based in Atlanta, Ga., to take over the 200-year-old New York Stock Exchange. According to an SEC filing, they have determined that the exchanges merging would abide by any laws and regulations related to securities and thus, approval was granted.
Regulators in Europe must now approve the merger before it can proceed and be finalized. NYSE Euronext, which includes stock exchanges in Europe, is the parent company of NYSE. The 28-nation European Union’s executive body, the European Commission, gave its approval to the merger back in June. Experts believe the deal will be finalized in time to close in the fall.
According to reports, shareholders would have multiple options to select from upon the merger. The options would be to select $33.12 in cash, about a quarter-share of ICE, or a combination of $11.27 in cash and one-sixth a share of ICE for each share of NYSE Euronext stock they own. ICE’s offer was valued at about $8 billion when the announcement was made last December. Based on the current value of ICE shares, the deal is believed to be worth about $10 billion.
ICE shares have gone up $1.12 in Friday trading to reach $181.47. NYSE Euronext shares have risen 22 cents to reach $42.07. ICE has previously said there would be few changes for the NYSE trading floor, which is known as the Big Board. Located at the corner of Wall and Broad streets in Manhattan’s financial district, the NYSE’s clout has been impacted by the rapid advances of technological changes as well as regulatory changes.
As there have been decreases in brokerage fees and declines in stock trading, futures exchanges, such as ICE, have constantly maintained solid profit margins. Exchanges write futures contracts and they must be bought and sold there, where stocks can be traded on any exchange. Those who buy futures are committing to a purchase at a specified date in future at a specified price. Futures can also lock in prices as a hedge to block further price movements. Traders can also use futures to help with price speculations.
The NYSE has operated for two centuries as it stands, so the pending merger and the approval of the merger are historic in the financial and investment world. Many experts said many eyes are watching from around the globe.
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