Investment in NYSE likely tricky

NEW YORK – After the surprise announcement that the New York Stock Exchange plans to merge with a smaller electronic rival and go public, one thing is clear: The global market is a booming business, and it’s about to get bigger.

Companies like the NYSE’s merger partner, Archipelago Holdings Inc., and Instinet Group Inc., whose electronic trading platform is being purchased by Nasdaq Stock Market Inc., aren’t exactly household names, but they’re well-known among Wall Street professionals who rely on their services. Investing in the companies that make the markets work can be a tricky business for novices, however, and with more consolidation likely in this sliver of the financial sector, analysts say shareholders should be prepared for volatility.

When it comes to investing in the trading stocks, “you have to be able to ride the ups and downs, because their revenue will be driven by market volume,” said Meghan Crowe, an equity analyst with Morningstar Inc. “They’ll be more volatile than your average retail stock.”

While many see it as a great opportunity, the deal casts doubt on the future of the NYSE’s current auction system, and the fortunes of its specialists – the people who currently handle up to 90 percent of its trading volume.