Amex Joins the Party

Figuring that it couldn't let its trading exchange peers get in on all of the fun, the American Stock Exchange is positioning itself to become a for-profit entity with a possible IPO next year.

The small exchange that became an early hotbed of exchange-traded funds will need to win the approval of the SEC and two-thirds of its 864 seatholders. That support is pretty likely, given the stock market success that NYSE Group (NYSE: NYX) and Nasdaq (Nasdaq: NDAQ) have achieved. Other trading platforms like the Chicago Mercantile Exchange (NYSE: CME) and CBOT (NYSE: BOT) have also fared well.

Based on the recent value that individual Amex seats have fetched, the company is presently valued at less than $200 million. That's a far cry from the $3.7 billion market cap that Nasdaq commands, or the $12.3 billion NYSE Group valuation.

Then again, values may start inching higher the way they did on the NYSE, after the exchange announced plans to go public by merging with Archipelago Holdings.

That deal worked out great for Motley Fool Rule Breakers subscribers. David Gardner was a fan of Archipelago's ArcaEx platform when the electronic trading exchange was gobbling up market share from more established players. He recommended the stock in the January 2005 newsletter, when it was at $20.45. Three months later it found NYSE on bended knee, and it's been off to the races ever since. Since then, the shares have nearly quadrupled.

The Amex may not have the same kind of storybook ending, but it certainly makes sense to give it a shot. Who knows? A small, yet storied exchange making waves to get noticed? There's always room in one particular market-crushing newsletter service for promising upstarts just like that.

Godspeed, Amex.

Longtime Fool contributor Rick Munarriz does not own shares in any of the companies mentioned in this story, but if he were an exchange, he would go public, too. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.