New York Stock Exchange parent NYSE Group Inc. will bring the Exchange back into the market for corporate bonds.
Next month, NYSE Group will begin trading the first of approximately 6,000 debt securities. The endeavor, known as NYSE Bonds, will drive fees down by as much as 80% in an effort to capture 25% of the $500 million private investor trade within one year.
"There has been an incredible desire on the part of the members of the exchange to trade not just stocks but everything in one place, to provide one marketplace for trading the entire balance sheet of any of our listed companies," said John Thain, chief executive officer of the NYSE Group. He spoke at the World Economic Forum's annual meeting in Davos, Switzerland.
The NYSE hopes to regain relevance in the fixed-income market. Investors currently trade about $355,000 of bonds a day at the exchange, compared with $19.5 billion between brokerages, according to the NYSE and the National Association of Security's Trade Reporting and Compliance Engine, or Trace system.
NYSE Bonds makes NYSE competition for any Wall Street firm, including major brokers Merrill Lynch, Citigroup and Wachovia. The Exchange promises to reduce trading costs for individual investors, who currently pay about $8 per $1,000 of bonds traded.
More than ten firms have agreed to make markets or provide bids and offers on bonds listed at the NYSE, according to John Holman, vice president for fixed income. Mr. Holman declined to name the individual companies.
NYSE Bonds is part of the Exchange's broader expansion plan. Since going public in 2005, the company has announced plans to move into European equities and trading features with the purchase of Euronext NV, which owns the stock markets in Paris, Amsterdam, Brussels and Lisbon. NYSE is also buying a 5% stake in the National Stock Exchange of India (the maximum permitted) and plans to form an alliance with the Tokyo Stock Exchange, as well as enter into the currently prohibited Chinese exchanges.
