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March 1, 1998

At Deadline - The Dowry

By John A. Byrne

There is endless speculation about the benefits of an Amex and Nasdaq marriage. The obvious benefit is that joining the two would provide an electronic order-delivery and execution system for Amex stocks via Nasdaq's trading platform. A merger, in fact, might make some floor brokers obsolete, since only large, hard-to-fill business would require them to traverse the noisy floor.

More significant is the possibility of Amex price quotes becoming a part of the Nasdaq price-quote montage. Nasdaq might then quote the inside market in Amex-listed stocks, posting bids and offers from the specialists and market makers in the same stocks, and the corresponding price quotes on electronic communications networks.

The Amex, of course, is an auction market where groups of stocks have a single specialist charged with maintaining a fair and orderly market. Integrating price quotes could benefit the investing public. "It would open true price-quote competition," said David Whitcomb, finance professor at Rutgers University. "It could ultimately improve and narrow spreads on Amex stocks."