Mayor Rudolph Giuliani is quietly pushing to create a soaring financial citadel in lower Manhattan that would house two fierce rivals: the New York Stock Exchange and the newly merged Nasdaq-American Stock Exchange.
Sources told The Observer that Mr. Giuliani is urging the Nasdaq-Amex to move into a tower above a 500,000-square-foot complex that the city has promised to build for the New York Stock Exchange’s rapidly expanding trading operation. The plan would create what one source close to the talks described as “the pre-eminent financial building in the world” across the street from the New York Stock Exchange’s 77-year-old headquarters at Broad and Wall streets.
According to the source, Mr. Giuliani is willing to “sweeten” the $200 million incentive package that he has offered to lure the Washington, D.C.-based Nasdaq-Amex to the city if the financial giant moves in with the New York Stock Exchange. The Nasdaq-Amex is also considering a site controlled by developer Douglas Durst in Times Square and another in Battery Park City.
The plan faces some daunting obstacles, not the least of which are the formidable egos of Richard Grasso, chairman of the New York Stock Exchange, and Frank Zarb, chairman of the National Association of Securities Dealers, which owns the Nasdaq-Amex. It seems unlikely that either Mr. Grasso or Mr. Zarb will approve the project if he feels it would allow his competitor to outshine him.
Michael Jones, chief administrative officer for the Nasdaq-Amex, told The Observer there are a number of potential problems with the plan and said the exchange is still considering moving to New Jersey.
City Hall officials declined to comment. Nonetheless, sources said the Giuliani administration is cautiously optimistic. So are real estate executives who are closely watching the negotiations.
The city administration’s willingness to offer more financial assistance to get Nasdaq-Amex to move to the downtown location would seem to be something of a reversal for the Giuliani administration. After all, when the administration first negotiated the $200 million package with the Nasdaq-Amex, it took the position that it wasn’t going to attempt to steer the exchange to any particular site because the Nasdaq-Amex was bringing new jobs to New York City.
A number of influential downtown property owners and business leaders were outraged that the administration wouldn’t use its influence to keep the nation’s largest stock market from snubbing the city’s historic financial district for Times Square. They lobbied city officials to reconsider the decision.
But a source said the administration’s new position wasn’t shaped by downtown interests. He said it was actually Mr. Grasso who first suggested that the Nasdaq should move into the Wall Street tower. “Nobody was thinking of them going there,” the source said. “Nobody thought it was possible. It only became logical after Dick Grasso brought it up. Nobody thought they would want to coexist together.” A spokesman for the New York Stock Exchange confirmed that his exchange had “no objection to New York City talking to the Nasdaq” about moving into the tower. He declined to comment further. But clearly it would be in the exchange’s interest to find another occupant for the 1.5-million-square-foot tower and move the entire project along. At this point, it’s only in the design stage.
Mr. Giuliani’s enthusiasm for setting up the two exchanges under one roof is understandable. The city and state agreed to acquire the land for the new building and to spend an estimated $450 million on construction as part of a deal struck last December to keep the New York Stock Exchange from leaving the city. According to a source, the Nasdaq-Amex’s rent payments in the tower would help offset the cost of buying the land.
More important, the project would help shore up long-suffering lower Manhattan. The city’s historic financial district has only recently begun to recover from the investment banking industry’s implosion after Black Monday and the rise of have-modem, will-travel money managers who have fled Wall Street to such fashionably rustic locales as Sun Valley, Idaho, and Jackson Hole, Wyo.
The presence of both the fast-growing New York Stock Exchange and the Nasdaq-Amex would restore lower Manhattan as the country’s financial epicenter. Both exchanges are moving toward longer trading hours which promise thousands of new jobs for Wall Street. Such a flurry of new activity would bolster the city’s efforts to turn lower Manhattan, now desolate after dark, into a thriving residential mecca rivaling nearby SoHo or TriBeCa. “As they all go to 24-hour trading, it will explode downtown,” a source said. “Are you kidding me? They’ll need restaurants, supermarkets, everything.”
Until recently, it would have been impossible to imagine the two exchanges sharing the same building. But now that the New York Stock Exchange, the nation’s largest stock market, has begun talking about trading some of the Nasdaq-Amex’s stocks and possibly even buying its way into the smaller market, the prospect of their sharing an address is no longer laughable. “The stock exchange is very supportive of it, very supportive of it,” the source said. “And I think Frank is very supportive of it.”
The source said Gov. George Pataki’s administration was also behind the plan. Maura Gallucci, spokesman for the administration’s Empire State Development Corporation, acknowledged that her agency had been in discussions with the Nasdaq-Amex. But she declined to comment further. “It’s no secret that we’ve been working with Nasdaq in finding a new home for them in New York,” she said. “However, it’s premature to discuss any specific site.”
Whether Mr. Zarb, a former Ford Administration energy czar, will actually sign a lease in the skyscraper is another question. Under his leadership, the Nasdaq has aggressively competed with the New York Stock Exchange for market share and media attention. Probably the most visible element of Mr. Zarb’s tireless campaign to enhance his exchange’s brand name is his interest in moving the Nasdaq’s headquarters to 42nd Street and Sixth Avenue. The Nasdaq is already installing what promises to be Times Square’s largest electronic billboard in the Condé Nast Building at 43rd and Broadway in a bid for more television coverage.
Given Mr. Zarb’s hunger for the spotlight, he may balk at sharing an address with Mr. Grasso. However, Mr. Jones, Mr. Zarb’s chief administrator, said the Nasdaq’s misgivings about the plan had nothing to do with ego. Instead, he questioned whether the city could meet the extensive power and technology demands of the two exchanges with a single skyscraper building.
Mr. Jones seemed equally underwhelmed by the city’s willingness to offer more incentives to get the exchange to forget about Times Square and Battery Park City and move to Wall Street. “We would hope the city and state would do that regardless of the location,” he told The Observer .
Mr. Jones didn’t rule out the possibility of the Nasdaq moving in with the New York Stock Exchange. But he spoke more enthusiastically of Times Square and Battery Park City. What’s more, he said the exchange was also considering consolidating its Washington and New York operations in New Jersey. The Nasdaq currently has an office on Whitehall Street in lower Manhattan. The American Stock Exchange is located nearby on Trinity Place.
Several sources responded that the building, which is currently being designed for the New York Stock Exchange by the architecture firm Skidmore, Owings & Merrill, could accommodate the technological needs of both exchanges. As for the needs of the two exchanges to maintain separate identities, it could be as simple as creating separate entrances. Another source insisted the city had an “ironclad” agreement with the Nasdaq that it wouldn’t move to New Jersey.
Mr. Jones’ statements are undoubtedly intended to send a message: The Nasdaq isn’t about to be pressured by the Giuliani administration.
A source familiar with the negotiations said Mr. Zarb was much more agreeable in private meetings with city officials. Moreover, the source said he expected his interest in the Wall Street skyscraper to grow the more the New York Stock Exchange talks about joining forces. “There’s going to have to be an alliance,” he said. “It’s big enough down there for both of them.”