The New York Stock Exchange and Deutsche Borse are both winners in the merger between the two large stock exchanges. Their costs will decrease as they share technology and resources to create the largest stock exchange in the world. And ideally, those cost savings will pass onto a larger pool of global investors.
But what about the Big Apple?
As the 220-year-old NYSE and German stock exchange officially announced their merger Tuesday morning, Sen. Charles E. Schumer, D-N.Y., said New York ought to come first in the new name.
"An outstanding issue that is important to me is the name of the new exchange," Schumer said in a statement. "NYSE is one of the most preeminent brands in the financial industry, and there is no reason it shouldn't come first in the new exchange's name."
During the press conference announcing the merger, Duncan Niederauer, CEO of the NYSE, said there has not been any decision about a new name.
Schumer is persistent about the issue. He also asked Treasury Secretary Timothy Geithner about what the new name should be during a finance hearing Wednesday morning.
"I don't make that judgment ultimately," Geithner responded. "I agree very much that this is in some way the world's iconic stock exchange. That happened in part because we had the best property rights, best disclosures, and best investor protections in the world. I think New York will remain at the center of that system for a long time to come."
Schumer said if New York loses out, the merger process could be in jeopardy.
"If Deutsche Borse pushes any alternative name, it would be an indication that they are not viewing this deal as a merger of equals, and that could have negative consequences with regard to future decisions on the merger's implementations," said Schumer.
Reena Aggarwal, a professor at Georgetown University's McDonough School of Business in Washington, D.C., said many people like Schumer feel strongly regarding the name because of its symbolism.
"Countries see it as a prestige issue," said Aggarwal. "In the old days an exchange was a huge prestige issue for the country. And every country wanted to have an exchange."
But she said the NYSE has been facing business challenges, including having trouble attracting initial public offerings. She also said the merger will allow the NYSE to globalize. Even Schumer acknowledged that the merger was a positive business move.
"The New York Stock Exchange will be the crown jewel in this new operation, and the name of the new company should reflect that," said Schumer.
New Name for New York Stock Exchange?
Schumer said he would keep an open mind until the name issue is settled.
"There are many things to like about this announcement, especially that it will open up new markets to NYSE and keep New York the world's leading financial center. There is a long way to go before this is a done deal, and I will reserve judgment until all the details are settled," said Schumer.
Aggarwal said possible names under consideration have been rumored to be NYSE-DB or the Global Exchange.
"Certainly the NYSE has existed for a very long time and the name has been associated with American capitalism. So I can see that some people would have problems if that name goes away completely," Aggarwal said. "But from a business point of view, it doesn't matter so much, but countries see it as a prestige issue."
Aggarwal said there are only a handful of large exchanges, and consolidation is frequent among them. The NYSE merged with the European stock exchange Euronext in 2007. And the NASDAQ merged with the Swedish exchange OMX, also in 2007.
Aggarwal expects additional consolidation in the industry – for both large and small exchanges – now that the economy is recovering.
"The markets are trying to globalize and it gives the exchanges a competitive edge," said Aggarwal. "It helps them to reduce costs and compete more effectively. Exchanges have a lot of competition from other trading platforms. Hopefully those cost savings will get passed onto investors."
Matthew Jaffee contributed to this report.