NEW YORK (Dow Jones)--Signaling its possible interest in acquiring a futures exchange, the New York Stock Exchange's parent said staking out a large position in the U.S. futures market would likely require an acquisition.
NYSE Euronext (NYX) Chief Executive John Thain, speaking Wednesday at a presentation for Wall Street analysts, also reiterated the exchange company's interest in expanding further in Asia, saying he was optimistic the NYSE would eventually make an equity investment in the Tokyo Stock Exchange, with which it now has an alliance, and expand its presence in India, where the NYSE owns a 5% stake in the Mumbai-based National Stock Exchange.
Thain indicated the NYSE doesn't see the need for another big stock deal in Europe, saying the exchange looked at the London Stock Exchange PLC (LSE.LN) before buying pan-European stocks and derivatives exchange Euronext, but ultimately went with Euronext.
Although the NYSE recently completed its acquisition of Euronext and still has work to do to integrate the company and produce the deal's promised cost savings and other benefits, NYSE officials don't seem fazed by the idea of doing another deal. When asked whether the company would allow its debt rating to go lower in order to do a deal, Chief Financial Officer Nelson Chai said the company could, though he didn't want to see its debt go into speculative, or "junk," rated territory.
"We can take a swing," Chai said, adding that he believed the integration work with Euronext was far enough along to look at another large deal. "We can walk and chew gum," Chai said at Wednesday's presentation. "We're far enough along on Euronext. The integration process is working well."
NYSE executives have made it clear they want to grow larger in the fast-growing derivatives business. Wednesday, Thain said the company could make some inroads into the U.S. in its present form - for example, by expanding the reach of its Euronext.liffe derivatives business - but that in order to have a significant position in U.S. futures, "I think we have to acquire something."
The CEO didn't pledge an acquisition or name a specific target. But Thain's focus on U.S. futures suggests the NYSE will likely look at one of four companies: Nymex Holdings Inc. (NMX), IntercontinentalExchange Inc. (ICE), CBOT Holdings Inc. (BOT) - parent of the Chicago Board of Trade - or Chicago Mercantile Exchange Holdings Inc. (CME).
But the NYSE's most likely merger candidate may depend on whether the CME can complete its planned acquisition of the CBOT or whether the ICE walks away with the CBOT. Nymex, which isn't involved in the CBOT deal, also has a trading floor in New York and has a common board member with NYSE, William Ford of General Atlantic.
Representatives for the ICE and Nymex weren't immediately available. A CME spokesman declined to comment as did a CBOT spokeswoman.
NYSE Euronext shares closed Wednesday's regular trading session down $3.44, or 4%, to $82.51.
Thain also was asked about how long he plans to stay at the NYSE, which he joined in January 2004 from Goldman Sachs Group Inc. (GS), where he was president. Thain has previously said that, when he took the job, he saw it as a three- to five-year gig, but Wednesday he backed away from that timeline, saying there was "no magic" to it and that he would stay on as long as the job appealed to him.
-By Gaston F. Ceron, Dow Jones Newswires; 201-938-5234; firstname.lastname@example.org
Personally, I think the reason ICE rose today was based on the very possibility that NYX will bid on ICE. Most likely CME/BOT w/merge and I think ICE and NYX believe that w/b the case. So, the only reason for ICE up today was the hope of NYX/ICE combination.