Under the terms of the deal unveiled by NYSE last week, which NYSE members and Archipelago shareholders must approve, the NYSE would pay $400 million cash to NYSE members, who would get 70% ownership of the combined companies; Archipelago shareholders would get the other 30%.
Langone reportedly is upset that Goldman Sachs acted as adviser to both NYSE and Archipelago, and believes that NYSE seat holders got short-changed as a result. Langone is a close ally of former NYSE chairman Dick Grasso and lacks the credibility to mount a serious attempt to derail the deal, says Jodi Burns, senior analyst at Celent Communications. "Most people in the industry view him as a troublemaker," she says. However, "other seat holders have also said the price isn't right," she says.
The NYSE holds about an 80% share of the market for trading securities listed on the NYSE; Nasdaq, after its acquisition of Inet, will hold between a 60% and 65% of the market for trading equities not listed on the NYSE.
The concentration of liquidity for U.S. equities into two large markets--NYSE and Nasdaq--could be harmful to competition, and regulators ought to take a closer look, Burns says. "The Securities and Exchange Commission would be appropriately concerned about four markets combining into two, with each market not having quite monopoly share but close."