An Alternext Reality

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The world has always been governed by certain immutable facts. Newton's Third Law of Motion says that for every action, there is an equal and opposite reaction. The law of conservation of energy outlines that energy can be neither created nor destroyed, it can only change form. And the law of unintended consequences suggests that any help by government to remedy a situation will only make it worse (hello, financial markets meltdown!).

To those basic principles, we used to add rules, such as that stocks listed on the New York and American stock exchanges will have one-, two-, or three-letter ticker symbols while the Nasdaq (Nasdaq: NDAQ) exchange will have four or five. That meant if you wanted to jump from one exchange to the next, you had to have your ticker conform to the new exchange's rules. Thus we had discount brokerage Charles Schwab (Nasdaq: SCHW), for example, add the letter "W" to its ticker when it moved from the NYSE to the Nasdaq.

A new reality
While the laws of gravity haven't been repealed just yet, the rules are certainly getting bent. For example, last year the Nasdaq exchange was allowed to start using two- and three-letter tickers, so we started seeing companies like Automatic Data Processing (Nasdaq: ADP), Mylan Labs (Nasdaq: MYL), and Hawaiian Holdings (Nasdaq: HA) using their abbreviated NYSE or AMEX symbols when they made the switch.

Now we'll need to accommodate ourselves to yet another transformation: the American Stock Exchange is no more.

A creepy, crawly innovator
Started back in 1842 on the sidewalks outside the New York Stock Exchange, the AMEX has had a storied history, even if it seems to get short shrift from Wall Street generally. For example, it was responsible for the creation in 1993 of the Standard & Poor's Depository Receipts now commonly known as "spiders" for their acronym SPDR, making it easy for investors to trade market indexes as easily as a stock.

Yet, consolidation ran rampant in the exchange market two years ago. The NYSE bought electronic trading platform Archipelago Holdings, and then the Euronext to become the imaginatively named NYSE Euronext (NYSE: NYX). Nasdaq bought the Nordic exchange OMX to become Nasdaq OMX (Nasdaq: NDAQ). And the Chicago Mercantile Exchange bought CBOT Holdings to become CME Group (Nasdaq: CME), which then bought the NYMEX exchange.

Next up!
The American Stock Exchange, first purchased by Nasdaq, was sold to NYSE Euronext to get subsumed in its maw. While there were no immediate changes, NYSE has now closed down the AMEX website and integrated the exchange's data into its own. The most notable change, perhaps, will be that stocks will soon no longer be identified as AMEX stocks, but rather will now become the mouthful NYSE Alternext US as it aims to be the premier exchange for small and microcap stocks. It's just a small step for a big exchange.