Magazine article American Banker

Nasdaq's Volatility Driving Banks to Big Board

Magazine article American Banker

Nasdaq's Volatility Driving Banks to Big Board

Article excerpt

In search of greater stability for their stock prices and a chance to trade alongside the biggest names in finance, regional banks and thrifts have been leaving Nasdaq and listing on the New York Stock Exchange.

Eleven financial institutions, nine of them banks, moved onto the Big Board since last October, according to the New York Stock Exchange's Web site.

For First Tennessee National Corp., which moved to the Big Board on July 30, the reason was to reduce volatility. "The day-traders were wearing us out," chairman, president and chief executive officer Ralph Horn said in an interview last week.

When trading was light, a trader could sell a small amount of First Tennessee stock and drive its price lower, triggering copycat sales, bank officers said. Day-trading, which is often driven by price fluctuations, exacerbates the problem. "Our stock was perfect" for day-traders, Mr. Horn said.

Otherwise, the $19 billion-asset Memphis banking company was happy with Nasdaq, its officials said.

Financial companies that have switched to the New York exchange cite research showing that a stock's trading volume increases when it is listed on the Big Board. They say that generally, the greater the volume, the lower the volatility.

Wilmington Trust Co. of Delaware, which moved to the New York Stock Exchange on Jan. 15, is an example. Its trading volume between February and May was 23% greater than in the same period of 1998.

The New York Stock Exchange's system of "specialists" is designed to keep a balance between supply and demand and reduce volatility.

Stocks listed on Nasdaq are traded through a group of so-called market makers, who match up buyers and sellers through computer trading. On average, one stock will have 11 market makers.

Other financial companies that have listed their stock since October included: Premier Bancshares of Atlanta; Metris Cos. …

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