Merrill Lynch Cuts Back on Nasdaq, OTC Stocks
Merrill Lynch & Co. on Tuesday slashed the number of Nasdaq and over-the-counter stocks it trades by about 75% and closed its Jersey City, N.J., site, as it struggles to cope with a dimmed market outlook after 30 months of falling share prices.
Merrill, the largest securities firm by capital, said it would stop trading some of the least active issues, known as OTC Bulletin Board and Pink Sheet stocks. Overall, the firm reduced the number of Nasdaq and OTC stocks it trades to 2,400 from 10,000.
Merrill also said it would move all Nasdaq trading to its New York headquarters, shutting a Jersey City office it had run after it acquired trading firm Herzog Heine Geduld Inc. two years ago.
Brokerages have seen trading profits crimped by the general decline in investor interest in stocks, falling per-trade values, and also by the move last year to decimal stock pricing. The pricing switch narrowed the gap between buy and sell prices of shares--the so-called spread that had long been a source of Wall Street profit.
Merrill said the Nasdaq stocks it would continue to track accounted for about 92% of the total year-to-date volume in that market.
“We are pleased that Merrill Lynch is continuing their commitment to make markets in virtually all major Nasdaq stocks,” a Nasdaq spokesman said.
However, Merrill’s decision removes a source of liquidity for smaller Nasdaq shares, potentially increasing their volatility.
Pitt Denies Pressure
on Board Chief Choice
Securities and Exchange Commission Chairman Harvey Pitt, embroiled in a new controversy, denied succumbing to pressure from Republicans and the accounting industry to abandon plans to choose a former pension fund chief to lead a new accounting board, saying that no one has yet been selected.
“Untrue press stories have suggested that the commission, or individual commissioners, have been besieged by pressures to reject the purported choice of a chairman that never was,” Pitt wrote in a letter to House Minority Leader Richard A. Gephardt of Missouri and fellow Democrats John J. LaFalce of New York and Barney Frank of Massachusetts.
Setbacks in selecting an accounting board chairman are putting new pressure on Pitt, who faced criticism in his first year as SEC chairman for being too close to the accounting industry, which he represented as a private lawyer. Trying to meet a Congress-mandated Oct. 28 deadline to choose the five-member accounting regulatory board, Pitt canceled part of a trip to Europe this week to concentrate on the selections.
Democrats are pushing him to select John Biggs, former chairman of the Teachers Insurance and Annuity Assn. and College Retirement Equities Fund, the largest teachers’ pension fund, to run the board.
Republicans have objected. House Financial Services Committee Chairman Michael G. Oxley, an Ohio Republican, said last week he wanted a “moderate” to lead the accounting board.
Two Democrats, Reps. John D. Dingell of Michigan and Edward J. Markey of Massachusetts, wrote to Pitt on Tuesday to “express our concern and displeasure regarding press reports indicating that, due to pressure from the accounting industry and its Republican supporters in Congress, you are backing away from the choice you and other members of the SEC had favored to head the new oversight board.”
Pitt, in his letter to Gephardt, LaFalce and Frank, said: “The commission has made no offers to anyone, received no acceptances from anyone, and, indeed, has not yet finished interviewing potential candidates for the board.”
Bloomberg News
