Too Early To Call Recovery, NYSE Euronext CEO Says

Too Early To Call Recovery, NYSE Euronext CEO Says. By Daisy Maxey
Dow Jones, Sep 24, 2009 15:13

New York -(Dow Jones)- Duncan Niederauer, chief executive of the NYSE Euronext (NYX), said he sees reason to be optimistic about the economy, but believes it's far too early to tell if the market's rebound indicates an economic recovery.

Niederauer said he hasn't seen enough from the government to directly stimulate investments. He made his comments here Thursday at the Investment Company Institute's 11th annual capital markets conference.

"We need to make sure that the money is available, and right now the credit market is not really open," he said. If you are a smaller company looking for affordable private capital, "forget it," he said.

He also called for simpler, more harmonized market regulation, and a more level playing field between regulated exchanges and alternatives, such a dark pools.

With U.N. meetings now taking place in the city, Niederauer said he's met with many heads of state this week.

"When I say that it's really difficult for small companies with pristine credit ratings to get affordable private capital," they say it's the same in their countries, he said.

While a lot of the solutions proposed by the Obama administration are " directionally correct," it hasn't taken action on many reforms yet, Niederauer said. One area of concern, he said, is the gap that exists between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

It's important to recognize that a lot of those in Washington, D.C., are not aware that about 40% of the market is opaque and largely unregulated. "They don't understand it," he said.

As for unregulated exchanges, Niederauer said he's not calling for the end to dark pools, though he does wish the barriers to entry were higher. He noted, however, that "we are burdened with a lot of stuff that those entities are not."

While a dark pool can simply move ahead with an idea, "we have to write a rule, file with the SEC, go through drafting, drafting, drafting," to move forward, he said. "They go fast, and we are forced to go really slow."

He called on regulators to level the playing field between the regulated exchanges and these unregulated venues.

"If you are going to allow these pools to exist, why would anyone want to be a regulated exchange?" he asked. "There are only burdens (to being a regulated exchange) in this country, and it's becoming increasing the case in Europe."

In addition, Niederauer indicated that there's room for manipulation of exchanges as they exist now. "If our responsibility collectively is to police the broader equity market, somebody needs 100% of the information," he said. " Right now, we don't have it."

Those venues that say they can't be manipulated don't know enough to be sure, he said. Those who wish to manipulate will not execute all legs of their plan in one venue, he said.

(END) Dow Jones Newswires