The NYSE is dead. Long live the NYSE.
The same can be said for the Nasdaq Stock Market, the American Stock Exchange and the Philadelphia Stock Exchange; the derivatives exchanges, such as the Chicago Mercantile Exchange and the Chicago Board Options Exchange; and alternative trading venues such as Liquidnet Holdings Inc. and ITG Inc.
This upheaval in U.S. capital markets, which industry executives agree is just beginning, is directly linked to the influence of money managers — and their pocketbooks.
"In the last five years, there's been a major shift in terms of institutions' ability to execute orders themselves," said Seth Merrin, chief executive officer of New York-based Liquidnet. "In 2000, their only access to liquidity was sell-side (brokers), but now the buy side (money managers) has the same access to liquidity as the sell side.
"There's been a huge shift in value."
The influence of investors has not been lost on securities regulators, who earlier this year approved sweeping market regulations that arguably started the ball rolling.
Facing these new regulations, which made price and speed the top priorities for trading stocks, exchanges and other market players have been scrambling to find ways to remain relevant to money managers. Much of the early activity has involved exchanges becoming for-profit enterprises, acquiring competitors or snagging investments from clients or others. Other players are making investments or making acquisitions.