Amex members approve NASD merger

The National Association of Securities Dealers (NASD) and the American Stock Exchange (Amex) are teaming up.

Amex’s membership voted 622 to 206 in favor of joining the NASD family of companies. The combination is expected to close before the end of this year, subject to the receipt of regulatory approvals of the U.S. Securities and Exchange Commission and Department of Justice.

In a release, NASD Chairman Frank Zarb calls the combination “a win for all market participants” that will lead to reduced costs and “allow us to build a Market of Markets where market participants will have access to the most advanced auction, dealer and options markets in the world.”

Adds Amex Chairman Richard Syron: “The Amex Membership has embraced change in order to thrive. This is a new beginning for us, repositioning the Amex as a much more vibrant competitor in equities, and an even more aggressive force in the options business.”

The agreement call for the expenditure of $110 million over five years, to upgrade Amex’s technology and trading facility, and $30 million over the next two years, to set up joint marketing. Also, a $40-million seat market fund will be established, to provide stability in seat prices.

Amex will continue as floor-basedist, central auction market, but with automatic execution capabilities and increased limit order transparency. Its options market structure will remain in its current form, and its members will keep their current trading rights and continue to exercise substantial influence on any significant future changes. Six members will serve on a new Amex board, including four from the floor, and an Amex committee will be established to represent members’ interests.

Completion of the deal would result in Amex becoming a separate subsidiary of the NASD. The Amex and Nasdaq (or NASD Automated Quotation) markets will operate separately and independently from one another, but will share certain facilities and will be a joint operation for tax consolidation purposes.

Amex, the only primary marketplace in the U.S. for both equities and derivative securities, trades more than 900 issues on its primary list.

The NASD is the largest securities industry self-regulatory organization in the U.S., serving as parent of Nasdaq, the world’s largest electronic market, which trades more than 5,400 companies.