You might not see footage on the business news of floor traders screaming and running on the New York Stock Exchange (NYSE) in the future. The NYSE announced its historical merger with electronic platform Archipelago Exchange, which entails the world’s biggest stock exchange going public and becoming electronic.

The $US400 million ($AU512 million) merger announced last Wednesday is one of the most radical moves by the exchange in its 212-year history. It came after the recent wrenching competition from more flexible electronic exchange rivals and growing pressure from major investors for cheaper and more efficient trading.

NYSE Chief Executive John Thain said the primary aim of the deal is to create a truly global competitor that can compete with anyone in the world, taking particular aim at the rival NASDAQ exchange.

“This transaction, transforming the NYSE into a public for profit entity, is an essential step to maintain our global competitiveness and leadership,” Mr Thain said.
The merger also triggers more questions about the chances of the NYSE’s traditional floor trading surviving in the longer run.

If the deal is approved by the regulators and Big Board members, this addresses two of the largest issues confronting the NYSE: its status as a not-for-profit entity and its shift to electronic trading away from manual trading. The new Big Board is to be called the NYSE Group.

Instead of simply trading in shares the NYSE will now diversify into bonds and exotic stock products like derivatives. Similar to exchanges in London, Frankfurt, Toronto and Sydney, the new New York exchange will be run for profit with its shares traded in public.

The NYSE is not the only stock exchange to release its merger plan. NASDAQ, the second biggest stock market in the US, announced plans on April 22 to buy the Instinet electronic platform from Reuters for about $US1.88 billion.

The merger claims the combination of NASDAQ and Instinet will provide investors with a technologically superior trading platform that is positioned to compete effectively.

Some information in this report was provided by Reuters.