News Release

NASD, Amex Boards Approve Definitive Merger Agreement

Washington, D.C. and New York, April 9, 1998 – The National Association of Securities Dealers (NASD) and American Stock Exchange (Amex) today jointly announced that their respective Boards have unanimously approved a definitive agreement to merge the Amex into the NASD family of companies. The strategic combination brings together the resources, technology and management to achieve a more efficient, transparent and lower cost market structure. A preliminary agreement was announced on March 18, 1998.

Under the terms of the agreement, the Amex will continue to operate as a separate specialist-based auction market with its own members and listed companies. The equity market will be enhanced through a new electronic limit order book where investors and market professionals will be able to automatically execute orders from off the trading floor. The Amex will also maintain its highly successful market in options and other derivatives.

The agreement offers a unique opportunity to deliver significant added value to the securities industry, publicly traded companies and ultimately – and most importantly – to the investing public. It will achieve economies of scale by leveraging technology and regulatory resources, thereby reducing costs to the industry and all those who participate in the process of exchanging stock.

Frank G. Zarb, Chairman and Chief Executive Officer of NASD, said, "This historic and innovative agreement is the first major step in creating a ‘market of markets’ to be built on a global computer network. It is a market alliance unparalleled in technology, expertise, information and execution to meet the needs of investors worldwide."

Richard F. Syron, Chairman of the Amex, added, "We believe that this combination builds on our organizational strengths – the Amex’s auction market, service orientation, and new jointly developed technology platforms and the NASD’s state-of-the-art quote-driven market and strong financial resources. It optimizes value for all concerned – investors, member firms and listed companies."

Following is a summary of the agreement:

  • The Amex would become a wholly-owned subsidiary of the NASD
  • Seatowners would retain current trading rights
  • The Amex equity market would continue as a centralized specialist-based auction market with manual and enhanced electronic access
  • A proposed new electronic order book would provide enhanced access and market transparency
  • Options market structure remains in current form
  • Financial Commitment:$110 million over five years on new generation technologies
    • $53 million on restructuring costs
    • Up to $50 million administered by a Fund Management Committee 
      • Seat Purchase Program for at least Five Years
      • Subsequent Uses of the Fund Include: Distribution to Members; Reduction in Exchange Fees; Investment in the Exchange; Continuation of Seat Purchase Program 
    • $30 million for an advertising program to promote both markets  

The definitive agreement is subject to approval by two-thirds of the Amex’s 864 seatowners voting at a special meeting scheduled for May 28. Voting materials are expected to be sent to the membership in the near future. Structural and rule changes for the NASD and the Amex will require SEC approval.

The American Stock Exchange is the only primary marketplace in the United States for equities, options and derivative securities. The Amex trades more than 900 issues on its primary list. In the options market, the Amex trades options on 29 broad-based and sector indexes and on 896 stocks and 103 Long-term Equity AnticiPation Securities (LEAPS). In addition, the Amex is a leader in listing warrants on foreign currencies and indexes, as well as hybrid instruments and other structured products.

The National Association of Securities Dealers, Inc. is the largest securities industry self-regulatory organization in the United States. Through its subsidiaries, The Nasdaq Stock Market, Inc. and NASD Regulation, Inc., the NASD designs, operates and regulates securities markets, and develops rules and regulations, provides a dispute resolution forum and conducts regulatory reviews of member activities, all for the benefit and protection of the investor.