This Is The NYSE's Plan To Win More Direct Listings

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

So Tracy, you know how people talk a lot about how big financial institutions and financial stocks in particular just haven't really done very well lately, it's been a long time, sort of a seeming permanent state of slump?

Tracy Alloway (0:35)

Yeah, I think it's easy to forget in 2020 when we have all these headwinds for the banks, like loan losses, credit provisions, building up, things like that, that even before now, there was this big debate about whether we were in a secular or a cyclical downturn for banking, and especially investment banking, right? You had all these new rules that came in after the 2008 financial crisis, and there was a lot of talk about whether or not banks could ever get back to the days of making big money.

Joe Weisenthal (1:09)

Yeah, that's exactly right. Even prior to this year, if you just look at sort of the main financial sectors of the S&P, lots of questions about financial companies' business model in an era of mediocre growth, very low interest rates, like there's just, this has been a sector that people haven't been into for a while.

Tracy Alloway (1:29)

Yeah, and of course, ultra low interest rates don't really help on the lending side either. So yeah, it feels like there have been, well, there has been a decade of challenges for banking.

Joe Weisenthal (1:41)

But, okay, so, but also what I said before was kind of a lie because not all financial companies have struggled over the last decade and some are doing phenomenally well.

Tracy Alloway (1:54)

You're gonna have to narrow that down for me. So are you talking about non-bank financial companies?

Joe Weisenthal (1:59)

So, yeah, so basically there are other parts of Wall Street besides the big banks that are killing it. And so if you look at, say, the last decade, a company like Goldman Sachs, stock, you know, pre-dividends is only up 17% over the last decade, but some of the other sort of infrastructure parts of the business exchanges doing phenomenally well, and ICE, the parent company of the New York Stock Exchange, they're up 300%, other big sort of exchanges, platforms, index providers doing phenomenally well. So when we talk about financials not doing well, we're talking about banks, but actually a lot of parts of Wall Street really are, have been on a phenomenal run.

Tracy Alloway (2:44)

Yeah, I think that's right. And of course, you've had a pretty good year for trading revenue because you had a lot of market volatility, and now you've had a big boom in bond and debt underwriting as well, because everyone's rushing to issue. So yeah, there are parts of the banking system that are doing well, and the non-banks of course, up until 2020 I keep caveat-ing this.

Joe Weisenthal (3:09)

Wait, what's your caveat? Oh, that it's not just this brief period that we're talking about this sort of, yes, absolutely.

Tracy Alloway (3:15)

Yeah.

Joe Weisenthal (3:15)

So today we're going to be talking about one aspect of, I guess what you would call Wall Street that is doing phenomenally well, one interesting business. One other thing Tracy, before we get to our guest, this has been quite a year for public offering.

Tracy Alloway (3:33)

Yes.

Even aside from traditional IPOs, we have seen a lot of SPACs, for instance, a new type of public listing or a new way of going public without actually going through the IPO process. So it's been an interesting time in equity capital markets.

Joe Weisenthal (3:51)

Yeah, it's super interesting because in addition to IPOs, we've had the SPAC boom and we also have this sort of emergence of direct listings, which is companies saying, you know, we're just gonna start trading our shares on the exchange and the market will set the price and we don't need to do the traditional IPO road show. And, you know, this is also a growing area of, or yeah, area of a new public listing. So today we're going to talk about the exchanges and that in particular. I'm very excited about our guest. We are going to be speaking with John Tuttle, Vice Chairman of the New York Stock Exchange. He's a 14 year veteran of the exchange.

He works on all areas of capital markets, IPO's, SPACs and direct listings. So sort of a fascinating person to discuss the NYSE's role in all this. So John, thank you very much for joining us.

John Tuttle (4:41)

Yeah, great to be with you guys.

Joe Weisenthal (4:43)