Exchange CEOs Square Off Over NYSE Takeover


In 2008, NYSE Euronext Chief Executive Duncan Niederauer arrived at an investor conference early to hear comments by Robert Greifeld, the head of rival exchange operator Nasdaq OMX Group Inc.

Mr. Niederauer cringed at Mr. Greifelds description of market-share gains in stock trading by Nasdaq over the Big Board, denouncing the numbers as dishonest.

Hes running for president. I am the president, the NYSE chief told the crowd, alluding to a line about actor Michael Douglass political enemy in the 1995 movie The American President.

The rival CEOs have a long history of tough talk and ferocious competition that could soon explode if Mr. Greifeld decides to make an audacious bid to break up Deutsche Börse AGs proposed takeover of NYSE Euronext.

For the past month, the 53-year-old Mr. Greifeld has been discussing with Nasdaq directors and other exchanges how to snare NYSE Euronexts stock-trading businesses, which is anchored by the 219-year-old New York Stock Exchange. A decision on whether to proceed with a bid is expected soon.

If Mr. Greifeld can torpedo the Deutsche Börse deal and walk away with the Big Board, he also would likely become Mr. Niederaurers boss. Analysts say the Big Board chief, a former trader at Goldman Sachs Group Inc., probably would quit, a move that would entitle him to exit-related payments of $34.3 million.

These are two competitive guys that have a history of going straight up against each other, says Richard Repetto, an analyst at Sandler ONeill Partners. Mr. Greifeld lives and breathes the Nasdaq, and he sees this as another showdown.

ChinaFotoPress/Getty Images for Robert and Bloomberg News for Duncan

A Nasdaq spokesman says Mr. Greifelds animosity toward Mr. Niederauer, 51, isnt personal. Neither chief executive would comment about the other for this article.

If the Deutsche Börse deal goes through, the combined company would tower over Nasdaq, marooning Mr. Greifeld without a major merger partner for the electronic market, launched in 1971 by Wall Street securities firms.

After last Mays flash crash, when stocks fell sharply and then rebounded within a few hours, Mr. Greifeld, in a CNBC interview, blamed the NYSE for turning off some of its systems when trading grew volatile.

Lets stop the finger-pointing, Mr. Niederauer countered in his own interview on CNBC. He said the NYSE system worked just as it was designed to, and that a tangled web of fast-trading electronic systems like Nasdaqs had pushed prices around.

Earlier this year, when Mr. Niederauer was discussing Mr. Greifeld with an investor, the NYSE chief executive started cursing, said a person briefed on the conversation. An associate of Mr. Greifeld says Its not really personal. He just doesnt have that much respect for him professionally.

Mr. Greifeld uses the rivalry as motivation. He gets up in the morning every day ready to beat the NYSE, says a former colleague.

During the 2008 investor conference, sponsored by Sandler ONeill, Mr. Greifeld crowed to a group that included Mr. Niederauer that Nasdaqs market share in stock trading was climbing, while a key gauge of the NYSEs clout had slipped below 28%.

It wasnt too long ago … we were trying to get [NYSE share] below 39%, then 35, then 33, then 30, and now its gone below 28%, he said. He didnt stick around to hear Mr. Niederauers rebuttal, according to attendees.

In the past few years, NYSE officials have started telling analysts and investors that the companys primary U.S. competitor is CME Group Inc. Duncan is like the political incumbent that doesnt want to give his opponent more credit by uttering his name, one analyst says.

Rivalry aside, the CEOs have some things in common. Both grew up on Long Island and wrote about stock markets, Mr. Niederauer in a middle-school paper and Mr. Greifeld in a graduate-school thesis at New York University. Mr. Niederauer honed his managerial skills running a restaurant in Atlanta, then went to business school at Emory University and eventually talked his way into a job at Goldman.

Messrs. Greifeld and Niederauer live about 10 miles from each other in different New Jersey suburbs. Mr. Niederauer prefers team sports like basketball. Mr. Greifeld ran marathons, later switching to a treadmill that allowed him to keep running with a bad knee.

Some outsiders say their rivalry has grown more intense because the stock-exchange business is under relentless pressure.

Theres been structural change that has made these two even more competitive, says Alfred Berkeley, a former Nasdaq executive who is chairman of brokerage firm Pipeline Trading Systems. Before both exchanges became for-profit, publicly traded companies, it would have been unheard of for Nasdaq to try to purchase the Big Board, Mr. Berkeley adds.

Now, both sides are preparing for a showdown over the fate of the New York Stock Exchange. If Nasdaq decides to proceed with a bid, people familiar with the matter say its executives are likely to criticize NYSE Euronext and Deutsche Börse as less successful acquirers than Nasdaq, according to people familiar with the matter.

Mr. Greifeld probably would be painted by NYSE Euronext and Deutsche Börse as a slash-and-burn CEO who doesnt devote enough attention to keeping valuable employees or expanding into fast-growing businesses such as derivatives.

—Gina Chon
contributed to this article.

Write to Aaron Lucchetti at