Two Plus Two Equals What?

Both the NY Times and the Washington Post have interesting articles on the NYSE-Archipelago and Nasdaq-Instinet Deals.

Two Plus Two Equals What?:

Highlights:

* "Former SEC chairman Arthur Levitt said he thought the NYSE's new structure would improve the independence of its regulatory arm, not weaken it, by fully removing it from any influence by brokerage and trading firms.

'By breaking up the clublike atmosphere of the member organization and becoming a more democratic, publicly owned company, you take a great step toward more disclosure and greater investor protection,' he said."

*"What will it mean if the NYSE floor, the symbolic home of American capitalism, source of millions of photos depicting traders in the throes of euphoria and the depths of despair, goes away? Won't something be lost forever?

"The NYSE has always been baseball, motherhood and apple pie all rolled into one," said Bradley of American Century Investment, an opponent of human traders working on a floor to handle stock transactions. "But it's not really the NYSE that is the envy of the world," he said. "It's the capital-raising process in this country that is the envy of the world."

And there are plenty of people who believe there will continue to be a role for human traders on the floor for years to come, especially in volatile and thinly traded stocks. "We will see a lot more electronic trading and automation in stocks where there is no need for an intermediary," said Sauter of Vanguard. "But where I do see the need for the traditional floor model is for less liquid stocks with wider [fluctuations in price] where you want someone who will take risks and make a market in those stocks. The combination of the two models is really exactly what you want.""

The NY Times questions Goldman Sach's role in the NYSE deal:
"Goldman, you'll recall, is an adviser to both companies, an investor in Archipelago and a Big Board specialist - conflicts so blatant that they are almost laughable.

Of course, it is easy to blame Goldman Sachs for not recusing itself from at least one side of the deal, something it should have done if for no other reason than to avoid the appearance of a conflict "