National Stock Exchange

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National Stock Exchange
Nsxlogo.jpg
Founded 1885 as Cincinnati Stock Exchange
Headquarters Jersey City, NJ
Key People Mark Sulavka, Chairman & CEO
Products Full electronic stock trading
Website www.nsx.com

(For the National Stock Exchange of India (NSE), see National Stock Exchange of India) (For the National Stock Exchange of Australia, see National Stock Exchange of Australia)

The National Stock Exchange, Inc. (NSX) is a fully-automated electronic marketplace for trading in stocks and exchange traded funds. It was the first all-electronic exchange in the U.S.[1] The exchange, headquartered in Jersey City, NJ, offers trading in all US exchange-listed equities on its NSX BLADE trading platform. The NSX and its routing broker-dealer are regulated by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

NSX was acquired by the CBOE Stock Exchange (CBSX) in 2012.[2] [3] [4]

In April of 2014 CBSX shut down trading because of a lack of volume, and a month later on May 2, 2014 the National Stock Exchange filed with the Securities and Exchange Commission to cease operations on May 30. However, the exchange said it was still growing its business and looking for a purchaser.[5]

The exchange reopened on December 22, 2015, under a new ownership group and management team, and with a new pricing model. [6] [7]

In December of 2016, ICE's New York Stock Exchange unit said it had agreed to acquire the NSX in the first quarter of 2017, heading off a planned shutdown of trading operations. As of December the exchange had a market share of 0.01 percent.[8]

History

The National Stock Exchange began as the Cincinnati Stock Exchange (CSX) in 1885 and survived unchanged for almost 100 years until 1980, when it was converted to the United States's first all-electronic exchange.[9] Six years later the CSX joined the Chicago Board Options Exchange via a membership deal[10] and introduced its first fully-automated intermarket trading system (ITS), linking its members to all possible markets.

In 1995, the CSX moved its headquarters from Cincinnati to Chicago and continued developing its electronic trading technology until it changed its name to the National Stock Exchange in 2003.[11] The exchange still maintains some operations in Chicago but the main operations base has been Jersey City since 2006.

The Turning Point

Just two years after the name change, NSX took a heavy blow in 2005 when the SEC ruled that NSX president and chief executive officer David Colker had not enforced rules guaranteeing customer orders better prices than own-account orders.[12] Colker was fined $100,000 and banned from future involvement in NSX regulation. The NSX was also ordered to "separate its regulatory and governance functions."

A year earlier, in 2004, CBOE and NSX had terminated their financial agreements and CBOE said it would surrender certificates of proprietary membership in the NSX for cash totaling $11 million over four years.[13] The now-decoupled NSX demutualized into a for-profit company in 2006 with investments by several bulge-bracket Wall Street financiers and decamped most operations to the East Coast. Later that year, NSX launched an entirely new grading-technology platform called NSX BLADE.

NSX then posted record trading volumes on its signature ETF listings in January 2008 that more than doubled the same figure a year earlier.[14] ETFs' January trading volume on the NSX rose from $664.5 billion in January 2007 to $2.23 trillion a year later.

The NSX began exploring strategic alternatives in 2010, when it sought to sell equity stakes in the company in return for stock-trading business.[15]

Products and Services

Specializes in facilitating trading for members in all ETFs available to electronically and provides data ranked by top-25 issuers, top-10 ETNs and top-10 funds. Also lists the 670+ ETFs used to collect the ETF ranking data.[16]

Key People

References

  1. History: About NSX: National Stock Exchange. NSX.
  2. SEC Blesses CBOE Stock Exchange Deal. WSJ.
  3. CBOE Stock Exchange to Acquire National Stock Exchange. CBOE Stock Exchange.
  4. CBOE Buys National Stock Exchange. Advanced Trading.
  5. National Stock Exchange Files With SEC to Halt Operations. Bloomberg.
  6. The National Stock Exchange Re-Launches Trading Operations. The National Stock Exchange.
  7. National Stock Exchange relaunches, aims to shake up U.S. industry. Reuters.
  8. NYSE to acquire NSX amid U.S. exchange consolidation. Reuters.
  9. History: About NSX: National Stock Exchange. NSX.
  10. CBOE, Cincinnati Exchange to link. Chicago Sun-Times.
  11. Notice of Filing and Immediate Effectiveness of Proposed Rule Change by The Cincinnati Stock Exchange. Securities and Exchange Commission.
  12. National Stock Exchange Settles With SEC. Marketwatch.
  13. Investments in affiliates (PDF). CBOE Annual Report 2006.
  14. NSX Announces Record January ETF Trading Volume Surpasses $2.2 Trillion. NSX.
  15. CBOE STock Unit to Buy National Stock Exchange. The Wall Street Journal.
  16. ETF Data Report. NSX.