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IntercontinentalExchange may Voluntarily Say Goodbye to Some Business

IntercontinentalExchange CEO Jeff Sprecher may voluntarily say goodbye to some of the New York Stock Exchange’s unprofitable business, according to Reuters.

Would you pay somebody to do business with you even if that meant losing money on the deal? You would if you were the New York Stock Exchange. (NYSE: NYX) It’s been going on for years and here’s how it works.

The historic New York Stock Exchange has become a bit of a dinosaur in the trading world. Smaller, computerized exchanges that don’t require a trading floor have taken market share from the NYSE. To combat that, the exchange has offered rebates to larger firms who place a large volume of orders. The problem with that is often, it loses money on the transaction. This quantity versus quality approach has IntercontinentalExchange (NYSE: ICE) CEO Jeff Sprecher speaking critically about the practice.

ICE purchased the NYSE for $8.2 billion in a deal that was just approved by shareholders of both companies.

Sprecher admits that if the exchange cuts rebates, it’s likely to use a large amount of market share but his goal is to be the leader in the trend. He not only hopes that this move would entice other exchanges to stop rebates, but even if it doesn’t, he’s happy to give the unprofitable business to his competitors.

“I want to give the market share where we are losing money back to the competitors. I will welcome them to take money-losing business off of our books,” he said.

 

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