New NYSE Chief Grasso Aims to Lure Foreign Firms
Richard A. Grasso, who today becomes chairman and chief executive of the New York Stock Exchange, says he plans to look abroad for help in overcoming the Big Board’s growing competition at home.
Grasso, 48, succeeds William H. Donaldson, 64, who last year announced his decision to step down. Grasso becomes the exchange’s fifth chairman since that position became full time in 1972, and the first to have worked his way up through the ranks of the 203-year-old institution.
In an interview, Grasso said his paramount goal is to persuade large foreign companies to list their shares on the NYSE. The reason, he said, is that there are only about 570 companies in the United States that meet the exchange’s stringent financial standards but aren’t already listed there. The exchange is working hard to lure those and is having a burst of success this year. But he notes that even if all of them suddenly jumped to the Big Board, they would add only about $440 billion to the combined value of all stocks listed on the exchange. That would be a relatively modest increase to the $5-trillion figure the NYSE hit at the beginning of May.
In contrast, the Big Board estimates there are 2,300 non-U.S. companies that meet the exchange’s listing requirements. Grasso says that if the NYSE eventually attracts a third of them, that will add about $4.5 trillion, nearly doubling the total market capitalization of NYSE-listed stocks. Currently, 206 non-U.S. companies are listed on the exchange.
Grasso, other exchange officials and Securities and Exchange Commission Chairman Arthur Levitt Jr. returned a few weeks ago from a swing through several Southeast Asian countries, where they touted the advantages of U.S. securities markets. The NYSE is also working on new technology that would allow simultaneous trading in different currencies of NYSE-listed stocks, a move Grasso says would make the exchange more attractive to foreign companies.
The exchange is under pressure to grow and maintain its dominance because of competition from Nasdaq as well as off-exchange trading systems and regional stock exchanges. Last year, Nasdaq for the first time began surpassing the NYSE in average daily trading volume, though critics contend that the Nasdaq figures include some double-counting. The total value of shares traded on the NYSE still vastly exceeds the value on Nasdaq.
But brokerage firms are also cutting into what was once the NYSE’s exclusive franchise by finding ways to match up their own customers’ orders for NYSE-listed stocks without taking the trades to the exchange.
The Big Board has had an upsurge in success in luring away big Nasdaq companies, which comes at a time when Nasdaq is under two federal investigations for alleged collusion among dealers to increase prices small investors pay. Nasdaq and the dealers deny any wrongdoing.
