NYSE, Archipelago Merger Approved

Deal Turns 213-Year-Old Big Board Into For-Profit Enterprise

(AP) 
Under the agreement, NYSE seat owners will receive more than $5 million for each seat, though just $300,000 in cash. The rest will be stock in the new company, which seat owners will be restricted in selling for up to three years. Archipelago shareholders will have their shares transferred to the new company on a one-for-one basis.

Although Archipelago shares were down 43 cents at $59.95 in trading Tuesday, shareholders have seen the value of their stock quadruple since the merger was announced April 20. In addition, the value of seats on the exchange rose from $975,000 in January to a record $4 million last week. Two more seats sold for that amount Tuesday before the vote. Seat sales will be halted Dec. 31, Thain said, as part of the deal's final steps.

While NYSE seat owners roundly approved the deal, a small group of dissidents, led by longtime seat owner William Higgins, had fought the deal in court, saying Goldman Sachs Group Inc.'s involvement in advising both Arca and the NYSE led to severe conflicts of interest.

Higgins settled last month after the NYSE agreed to have Citigroup author a fairness opinion on the deal. Citigroup concluded that the deal was fair to all involved.

And just hours before the vote, a group of floor brokers calling themselves the Independent Broker Action Committee issued a statement criticizing the NYSE's hybrid market initiative — a move to marry the floor trading system with increased electronics. The NYSE must implement a "fast-market" technology platform before summer under a Securities and Exchange Commission mandate.

The floor broker group said the NYSE's hybrid system would leave floor brokers out of major trades, limiting their access to liquidity and threatening their livelihoods.

Thain said NYSE officials have spent hundreds of hours with floor brokers, and that the system was still being developed. "While a small number of people, although vocal, are opposing this, the vast majority of brokers are very supportive," Thain said.

Membership, or "seats," at the exchange, represented both an ownership stake and the right to trade stocks on the floor. Those trading rights will now be auctioned off each year in a Dutch auction format to those companies and individuals who are now members or lease those rights from members. The exchange will keep those revenues, which used to go to seat owners.

"We're still going to call them seats, because we want to maintain that this is a special place to work, and that the floor is a special place," Thain said.