Saturday, December 23, 2006

Fight over NASD-NYSE regulatory merger escalates

A Reuters story reports that the FIA claims that it has enough support to derail the merger between the NYSE and the NASD and charged regulators with trying to steer votes.

An NASD survey found that 43 percent of the firms polled favored the plan, 14 percent were against, and the remainder were undecided. While the NASD spins that poll to claim that "there is strong support among firms that have made a decision about consolidation," the key phrase is "that have made a decision. Another way to look that those numbers is that 57% of the firms have not decided, or are against the plan.

One former NASD director had an interesting quote in the article:

I don't think NASD anticipated this would trigger as organized and perhaps as loud a response," Wolper said. "A lot of member firms are somewhat distrustful of NASD.

If somebody is telling things feeding that distrust, then they might be more willing to say: 'I'm not necessarily voting no forever, but maybe just for now until I get more information"
It's always about trust. And can you really blame small firms for not immediately trusting the NASD? While the merger is undoubtedly good for the industry and the firms, this merger moved from concept to announcement to vote at lightening speed, with little or no discussion.

Small firms are skeptical of the benefits to them, and without an explanation and a chance for input and discussion, who can blame them?