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April 30, 2001

At Deadline

By Editorial Staff

Amex Sale

*American Stock Exchange officials say recent published reports are wrong. "There is no possible sale of the American Stock Exchange," said Amex spokesman Robert Rendine. In fact, the Amex sent a memo to its members indicating it was not on the auction block right after an article in the Wall Street Journal talked about a potential sale. However, the 90-year-old exchange will definitely be spun off from its parent, the National Association of Securities Dealers. "Within a year we will make a decision on what the ultimate separation strategy will be," Rendine said. "Whether it's an IPO, to buy somebody, to merge with somebody, all options are open."

The Amex held talks with Instinet and Archipelago about possible alliances. But nothing emerged from these discussions. "This has nothing to do with selling the Amex," Rendine stressed. When the Amex merged with Nasdaq in 1998 there were expectations that the Amex would be strengthened with new equity listings and more volume. Back then it had 662 listings; now the list is down to 635.

New Trio

*In market data, the Big Four are now three. Reuters bested SunGard's bid for certain assets of Bridge Information Services by $110 million, eliminating a competitor and strengthening its own position. The top market data vendors are now Reuters, Bloomberg and ILX. Reuters' winning bid was $275 million. SunGard offered $165 million.

In addition to Bridge's North American data services, Reuters picked up Bridge Trading, a $142 million agency broker; a bond pricing service; eBridge Internet software; the Commodities Research Bureau Index; and Bridge Trading Technologies. The combo could marry Reuter's Lynch John & Ryan and Bridge Trading, both of which are top agency brokers. Reuters did not want Bridge's operations outside North America nor its ADP retail equity business; Telerate; BridgeNews and the Bridge Commodity business. Reuters expects the transaction to close in four months. Bridge filed for bankruptcy in February.

Pink Sheets

*Quote vendor Pink Sheets LLC got a big boost in visibility when Bloomberg agreed to distribute its quotes to its 156,000 subscribers. In one fell swoop, the deal gives the bottom-rung Pink Sheets market exposure approaching that of Nasdaq's Bulletin Board. Both micro-cap markets make up the overall over-the-counter market, but the bulletin board stocks can be viewed on 400,000 Nasdaq terminals. The nearly 3,000 pinks are currently visible only on the 1,500 terminals receiving Pink Sheets' Electronic Quotation Service.

Bloomberg customers will have a choice of two displays. Level One gives them the inside market, last sale price, size and update time. Level Two is for market makers and displays everything in Level One plus a full montage of all market maker quotes and IDs. Demand will be greatest for Level One, according to Cromwell Coulson, chief executive of Pink Sheets. That's because Bloomberg has minimal penetration among market makers. Bloomberg's customers are mostly buyside traders, portfolio managers, sales traders, hedge funds and retail brokers.

Monopoly?

*A new New York Stock Exchange rule bans specialists from posting superior prices on ECNs and other market centers prior to posting them on the floor.

The Securities and Exchange Commission, which approved the rule change, said the proposal will "allow specialists to meet their obligations by ensuring that if a specialist places a superior price bid or offer on an ECN or other market center, the specialist can trade at his or her best bid or offer with contraside marketable orders received on the [Big Board]."

The rule change was attacked by Archipelago and others who charged that it allows the Big Board to protect its monopoly. The Big Board contends that the rule does not unfairly restrain competition because it does not inhibit where orders are sent. The rule establishes a parameter for the specialists' quotes, the exchange contends.