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. Last Updated: 07/27/2016

NYSE Hungers for Acquisitions

NEW YORK -- The New York Stock Exchange said it was considering acquisitions, providing the latest indication that the pace of consolidation in the global equity markets is about to increase.

The NYSE's April 14 disclosure is the first indication that chief executive officer John Thain is seeking to fulfill his promise to make the newly formed NYSE Group Inc. a leader in consolidating exchanges globally. Nasdaq, the NYSE's largest U.S. rival, got a jump on Thain last month with a $4.2 billion bid for the London Stock Exchange.

"In this brave new world where the NYSE has a hot currency it can use for takeovers, Thain would be a fool not to use it," said James Angel, a finance professor at Georgetown University in Washington.

U.S. securities exchanges have announced eight acquisitions since the start of 2005 to bolster their technology or expand into trading of other securities. The deals have been fueled in part by a global rally in shares of securities exchanges. The FTSE/Mondo Visione Exchanges index, which tracks 16 markets, has more than tripled since 2002.

Brokerages have struck their own deals too. Credit Suisse Group last year invested in the Philadelphia Stock Exchange and a venture of the Boston Stock Exchange. Citigroup and Knight Capital Group each acquired closely held electronic markets.

Thain, 50, has said he wants to make acquisitions using stock of NYSE Group, which has gained 17 percent since its trading debut on March 8. The Big Board last month completed its purchase of Archipelago Holdings, ending 213 years as a member-owned institution to become a publicly traded company.

"We are currently engaged in discussions with certain participants, although no definitive terms have been discussed or agreements reached,'' the exchange said in the April 14 filing with the U.S. Securities and Exchange Commission. The disclosure was not included in a March 13 version of the filing related to the NYSE's planned share sale this quarter.

Christiaan Brakman, a spokesman for the NYSE, declined to comment.

Nasdaq last week bought a 15 percent stake in LSE for $781.5 million, making it the largest shareholder in the 308-year-old bourse.

The NYSE's talks may in part be defensive. A Nasdaq-LSE combination could weaken the NYSE's primacy as a listing venue for the largest companies in the world, according to Michael Pagano, a finance professor at Villanova University in Villanova, Pennsylvania.

"Nasdaq would gain a great brand name,'' Pagano said. "To get those marquee global companies on their exchange, Nasdaq realizes it can slug it out one-by-one with the New York Stock Exchange, but if it had London, it would be that much easier.''

"The market for acquisition targets and strategic alliances is highly competitive, particularly in light of increasing consolidation in the securities industry,'' the NYSE said in its filing. "We intend to continue to engage in strategic discussions and we will need to respond to potential opportunities quickly and decisively.''