With new leadership at the helm, the Amex announced in 2005 that the rules for its new hybrid market structure were filed with the Securities and Exchange Commission. The Exchange also aggressively moved ahead to transform its technology by creating AEMI - the "Auction and Electronic Market Integration" platform - a new state-of-the-art trading platform supporting Amex's market structure that will be rolled out with the implementation of Regulation NMS in June 2006.
"New leadership, fresh ideas and a clear business strategy have revitalized the American Stock Exchange," said Neal Wolkoff, Chairman & CEO. "While there remains much work to accomplish in 2006, I am confident that the Amex is on a growth path and we will continue to lead the industry in innovation, diversity of products and personal service."
Technology
The Amex showed its commitment to providing its customers with the highest quality in technology by creating the AEMI trading platform. AEMI unites the best qualities of the electronic market and the auction market and is designed to support all of the products currently offered by Amex: equities, ETFs, options and bonds. AEMI is a state-of-the-art trading platform that will ensure that the Exchange is competitive in the post-Reg NMS environment.
"AEMI will provide our customers with the best of both worlds and will put the Amex in a powerful position to be more competitive and help the Exchange gain market share," said Antoine Shagoury, Chief Information Officer. "It is an exciting time for the Amex, and AEMI highlights the changes made during the past year under a new management that not only understands technology but also understands the opportunities for success."
Over the last several months, the Amex has made significant strides in the reduction of system latencies and processing capacities. Recent improvements within Amex Order File (AOF) have reduced equity and option order processing time to below one second, while near doubling message capacity. In the options space, the migration of the ANTE platform to LINUX has increased system capacity four fold and dramatically improved system latency and turnaround times, making the Exchange much more competitive.
"With the elimination of significant order latency in AOF and ANTE, and the expansion of order and inbound and outbound quote capacity, we are confident that our members will be well positioned to compete," said Mr. Wolkoff. "Improving technology was my number one priority when I was appointed to lead the Amex in 2005 and I am proud of the tremendous efforts that have been made. I am committed to continuing on this aggressive pace to bring state-of-the-art technology to the Exchange. There is no doubt in my mind that the Amex will grow its market share in a post-Reg NMS environment."
Equities
New company listings rose for a third straight year, with 97 new companies choosing the Amex as its listing venue in 2005, an 8% rise from the previous year. The Amex was the only exchange to be net positive in new listings for the year, a tremendous achievement in a competitive marketplace.
The diversity of Amex's new listings is also testament to its strength and its services are a magnet for growth companies. The Amex is able to provide customized services that a growing company requires, regardless of its geographic location or industry. Among the Amex's international listings in 2005 were companies located in Canada, China, the United Kingdom, New Zealand and Italy.
"In 2005 our strategy to aggressively pursue quality listings both domestically and abroad proved a major success for the Amex," said John McGonegal, Senior Vice President of Amex's Equities Group. "We plan to capitalize on our strength within the domestic markets and further expand our commitment to attracting desirable foreign listings by demonstrating the strong value proposition a listing on the Amex provides."
The Amex has always welcomed companies in all stages of development, but it is especially proud of the attention it gives to small and mid-size firms, which are the lifeblood of the American economy. In 2005, the Exchange moved to establish itself as a forceful defender of this critical segment of U.S. business, with Chairman Wolkoff testifying to the SEC on the impact of Sarbanes-Oxley legislation on small companies. He also wrote a well-received Op-Ed piece in The Wall Street Journal in 2005 that described the concerns that small companies face.
The Amex Composite Index, barometer of the performance of Amex-listed stocks, continued its strong performance in 2005, rising 23% in 2005 to 1759.08. The XAX is up 96% over five years. The index outpaced every domestic broad-based index including the Dow Jones Industrial Average, Dow Jones Wilshire 5000 Composite, Nasdaq Composite, New York Stock Exchange Composite, Russell 2000 and S&P 500.
Options
The Amex continues to be one of the largest options trading venues in the world, and this year celebrated its 30th year of trading options. In 2005, the Exchange made significant strides towards enhancing the Amex New Trading Environment (ANTE), a fully automated platform that ensures the Amex a place as an Exchange of the 21st century.
This year, the Amex saw the first in a series of replacements for ANTE's matching engines that greatly improved the system's efficiencies. In the first half of 2006, the Exchange expects to activate the second of two new data centers, which will facilitate the ANTE platform's move from SIAC.
In 2005, the Amex garnered a total of 201,764,835 options contracts traded, and an average daily volume for the year of 800,654. In equity options trades, which make up the majority of the Amex's options trading volume, the Amex traded 193 million contracts and an average daily volume of 766,215.
"While 2005 was a challenging year, the Amex remains optimistic about the options business. We have made significant improvements to the ANTE platform, which will make us more competitive in the marketplace," said Michael T. Bickford, Senior Vice President of Options.
Exchange Traded Funds
In 1993, the Amex pioneered the creation of the industry's first exchange traded fund. Twelve years later, the industry has seen an explosion in growth for these unique instruments and the Amex continues to lead the industry as the dominant player. In 2005, the Exchange brought 46 new ETFs, representing 89% of new ETF issuances, a record year for new listings. The Amex closed the year with a total of 150 ETFs.
Cliff Weber, Senior Vice President of the Amex's ETF Marketplace, said, "2005 was our strongest year ever in terms of new listings - 46 new products from six different issuers and the Amex's pipeline remains full of new and innovative products going into 2006. We look forward to working with our existing partners and with new entrants to bring exciting new products to market and to continue to be the center of ETF growth and development."
The Amex is proud to have worked with First Trust Advisors in launching its first ETF during 2005. In addition, the Amex welcomed back PowerShares, Vanguard, State Street, iShares and Rydex. In all, six issuers chose to list their new ETFs on the Amex in 2005, a testament to Amex's widely recognized superior services and product support for ETF listings. Amex-listed ETFs closed the year with over $200 billion a year in assets.
Capital Markets
The Amex's Capital Markets Group showed impressive strength in 2005, having a record year in bringing new products to the marketplace and continuing to exemplify why it has become a premier destination for capital market issuers. The Amex listed 136 new products in 2005, up from 115 in 2004. As of December 30, 2005, the Amex traded a total of 373 structured products.
"The Amex's Capital Markets Group continues to surpass expectations and bring new and innovative structured products to the marketplace," said Richard Mikaliunas, Senior Vice President of the Capital Markets Group. "This is the fourth consecutive year that we have listed more than 100 new products and we expect to continue to lead the industry in 2006."
Closed-End Funds
The Amex continues to build its closed-end fund business, with three issuers returning to list their new closed-end funds on Amex in 2005. RMR Advisors added its fourth closed-end fund with the launch of RMR Preferred Dividend Fund; ALPS Mutual Fund Services, Inc. sponsored its third listing, Clough Global Equity Fund; and Gabelli Funds returned to list its second fund, The Gabelli Global Gold, Natural Resources and Income Trust.
These firms are among 32 leading closed-end fund issuers who have chosen to list their funds on the Amex, contributing to its rank as the second largest closed-end fund exchange in the U.S., with 144 listings and total assets exceeding $25 billion as of year-end 2005.
About American Stock Exchange
The American Stock Exchange® (Amex®) is the only primary exchange that offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRSSM. In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 150 ETFs to date. The Amex is also one of the largest options exchanges in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks.