Northern, WI  11/6/2012  (BasicsMedia)  —  NYSE Euronext (NYSE:NYT): Strong and Afloat after a tough battering from Hurricane Sandy, I was encouraged to see Duncan Neiderauer rolling up his sleeves in long overnight sessions to keep the iconic brand for transactions gleaming.  I wasn’t around in 1888 when the exchange closed for 2 days, but take heed, anytime a transaction based exchange shuts down it’s big news.

I have been around exchanges most of my career and the key to the entire business model is simple – transactions, transactions, and more transactions.  Unfortunately for 2012 the clearing culture building blocks these transaction based companies sit on, are antiquated, and I am not referring to old trading floors..I am talking about technology and redundancy.  Every exchange has a clear redundancy plan they hope they never have to use and many dollars are invested for an event like Sandy.

On October 29th every transaction based exchange who derive revenue from trading and transactions had to deal with their emergency plan.  The devastation caused by the storm kept the functionality of the markets in the background, and I think closing the exchanges all together was a brilliant move on someones part.  In the United States, Hurricane Sandy affected at least 24 states, from Florida to Maine and west to Michigan and Wisconsin, with particularly severe damage in New Jersey and New York. Its storm surge hit New York City on October 29, flooding streets, tunnels and subway lines and cutting power in and around the city. The NYSE had the most to lose as the storm flooded Manhattan.

The other 3 major exchanges also dealt with the market shut downs in their own ways, and recent trading losses will effect the entire group.  The Intercontintental Exchange (NYSE:ICE) recently said  “Revenues grew 4% year-to-year to a record $1 billion. Net income attributable to ICE was $422 million, up 10% year-to-year. And operating margin increased to 61%. Diluted earnings per share rose 11% and operating cash flow grew 6%. This strong performance has enabled us to continue to prudently invest in several initiatives ranging from our APX-ENDEX agreement to the acquisition of WhenTech.”

The CME Group (NASDAQ:CME) is another exchange close to my heart and is very well run by old friends and all thoughts of summer days in the Chicago trading community bring a smile to my face.  Shares also had a great start to 2012 and then a stock split, making it a great 2012 investment.  Don’t forget the NASDAQ OMX (NASDAQ:NDAQ) as all will respectively report- or will report – effected numbers.

But anyone who has followed markets must hold a place in their private trading gut as the these stalwart iconic exchanges sidestep a powerful Hurricane Sandy and get back to the business of transactions.  These public companies flew under the radar and did a great job with PR and now will spend time rebuilding and retesting and reviewing these redundant systems.


Disclaimer:  We have no position in any stock mentioned here.


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