2003 Highlights
- Amex Composite Index (XAX) surges 42%, sharply outperforming all domestic broad-based indexes over a three and five year period.
- Total new Amex listings - equities, closed-end funds and structured products - increase to 206, with new company listings surpassing those on the New York Stock Exchange.
- Successful launch of IDSs, or Income Deposit Securities, a brand-new dividend and interest-bearing equity security.
- New closed-end fund listings raise more than $7 billion in assets, a 40% increase over 2002.
- Assets invested in Amex-listed exchange traded funds grow to $155 billion, up 47% compared to 2002.
- Agreement reached with NASD to make Amex an independent entity and transfer control to the Amex Membership Corporation.
Equities, Closed-end Funds & Structured Products
The Amex finished the year with 76 new company listings, a 77% increase over 2002. More new companies listed on the Amex in 2003 than on the NYSE. In addition, average daily trading volume for new companies listed increased 22% and the average daily volume of Amex listed companies rose 65%, compared to 2002.
The American Stock Exchange Composite Index (XAX) had another incredible year of gains, rising 42% to 1175.19. The XAX, which is comprised of all the listed companies on the Exchange, was the leading index over a three-year and five-year period, sharply outperforming the Russell 2000 Index, Wilshire 5000 Index, New York Stock Exchange Composite Index, Standard & Poor's 500 Index, and the Nasdaq Composite Index. The XAX was the best performing index during the three year bear market, rising 31% from 2001 to the end of 2003, and surging 70% over five years. In comparison, the NYSE Composite Index, Nasdaq Composite Index and S&P 500 Index trailed with negative returns.
The Amex continued to lead in innovation with the successful launch of Income Deposit Securities (IDSs) in 2003. IDSs represent a brand new product category of yield-oriented unit securities that consist of the debt and common stock of a single company. They were created by CIBC World Markets to be an attractive new investment opportunity for investors. The impressive debut of IDSs in the U.S. market, with the initial public offering of Volume Services America Holdings, Inc., was a huge achievement for the Amex.
The Amex listed 19 new closed-end funds in 2003, bringing the total number of closed-end funds to 143 with more than $22.5 billion in assets. Of the newly listed funds, four were funds that voluntarily delisted from the NYSE to list on the Amex. Issuers that listed on the Amex in 2003 included Cornerstone Advisors, Credit Suisse Asset Management, Daiwa Securities Trust Co., Deutsche Asset Management-Scudder Investments, Eaton Vance, Evergreen Investments, First Trust Advisors, Four Corners Capital Management, Franklin Templeton, ING Clarion Real Estate Securities, Neuberger Berman, Nuveen Investments and RMR Advisors.
Our largest new closed-end fund, Eaton Vance Limited Duration Fund (EVV), listed 101 million shares at $20 per share in one of the largest closed-end fund IPOs ever. EVV is now the largest closed-end fund listed on the Amex and it brings the total number of Eaton Vance funds listed on the Amex to 21.
Neuberger Berman also returned to Amex to list the Neuberger Berman Income Opportunity Fund (NOX) and the Neuberger Berman Real Estate Income Fund (NRO). Neuberger Berman now has five closed-end funds listed on Amex since initiating its first ever closed-end fund on the Amex last year.
Evergreen Investments, the investment management subsidiary of Wachovia Bank, chose the Amex to list its two closed-end fund issues in 2003. The Evergreen Income Advantage Fund (EAD) raised over $1 billion in assets in its February IPO. The Evergreen Managed Income Fund (ERC) raised $780 million in its June IPO. In September, Evergreen Investments voluntarily delisted its closed-end fund, Vestaur Securities, from NYSE and listed that fund on the Amex.
In addition, Cornerstone Advisors listed three funds on Amex in 2003. Those three funds had previously been listed on NYSE; Cornerstone Advisors voluntarily determined to delist those funds from NYSE for the purpose of listing on Amex. First Trust Advisors also issued its first three closed-end funds in 2003 and chose to list those funds on Amex. Two of the funds, First Trust Value Line 100 Fund (FVL) and First Trust Value Line Dividend Fund (FVD), were the first general equity closed-end funds to be listed in eight years.
The Amex experienced yet another year of solid growth within its capital markets group, listing 111 new products in 2003, for a total of 299 listed structured products trading. Issuers that joined the Amex in 2003 included Canadian Imperial Bank of Commerce, Credit Suisse First Boston and Wachovia Corporation.
"We believe that 2003 was an exciting year for equities, closed-end funds and structured products at the Amex," said Peter Quick, American Stock Exchange president. "Even in today's competitive environment, the Amex has proven that quality, service and accountability make it the premier marketplace for innovative issuers to access the capital markets."
Exchange Traded Funds
The American Stock Exchange expanded its dominant role as the global leader and pioneer in exchange traded funds with the addition of seven new ETF listings in 2003, for a total of 123 of the 134 ETFs listed domestically. By year-end, assets in Amex-listed ETFs rose to nearly $155 billion, up 47% over last year. The Amex also celebrated the 10-year anniversary of its flagship ETF, Standard & Poor's Depositary Receipts (SPDR), and the 5-year anniversary of Diamonds in 2003. In addition, the Amex launched the cross listing of Diamonds on Euronext Amsterdam in September. The Amex’s partnership with Euronext, a European leader in ETFs, broadens investment choices for European investors and leads the way for further cross-Atlantic cooperation in the capital markets.
The Amex welcomed Rydex Global Advisors as a new ETF issuer in 2003, listing the Rydex S&P Equal Weight ETF (RSP), based on the S&P Equal Weight Index. In addition, Barclays Global Investors increased the number of iShares listed on Amex to 83 by adding iShares MSCI-South Africa (EZA), iShares MCSI Emerging Markets (EEM), iShares Lehman Aggregate Bond Fund (AGG) and the iShares Dow Jones Transportation Average (IYT).
The Amex also added the PowerShares Dynamic Market Portfolio (PWC) and the PowerShares Dynamic OTC Portfolio (PWO) in May. The two PowerShare ETFs are benchmarked to the performance of the first two Intellidex Indexes that were launched in April.
To cap off a strong year in the ETF marketplace, the Amex will be collaborating with Vanguard again in 2004 with plans to extend its VIPERs family of ETFs listed on the Amex.
Cliff Weber, senior vice president of the ETF Marketplace, said, "The future for ETFs at the Amex continues to look very strong. While the industry has faced a year of retrenchment, the Amex has continued to build on its dominance in the ETF marketplace by focusing on product diversity, innovation and customer service."
Options
The Amex experienced a slight decline in overall options trading for the year, with equity options volume falling 4%. However, the Amex remained the leader in firm-based equity option volume in 2003, handling 30% of firm volume. The Amex was also a top performer in customer-based equity option volume with 23%. In 2003, average daily volume of Amex options was 714,583 contracts, with a total of 180,074,93 contracts traded at the Amex.
Amid a heightened competitive landscape within the options marketplace, the Amex responded to a number of competitive challenges within the industry and addressed issues involving electronic trading and payment for order flow. To remain competitive with electronic rivals, the Amex continues on its path towards increased automation. The Amex New Trading Environment, or ANTE, is a new fully electronic trading platform that will be rolled out upon regulatory approval. ANTE, will allow option traders to take advantage of both the speed of an electronic exchange and the benefits of an auction market. In addition, the Amex re-instituted payment for order flow in response to competitive measures, doing so only after every other competitor in the marketplace had re-established the practice.
Demonstrating its commitment to meet the growing demands of customers, the Amex made further enhancements to its legacy systems. The Amex increased the size limits available for auto-ex orders among the most actively traded option classes and included orders for competing market makers as well. The Amex enhanced auto-match functionality for our electronic option books, enabling customer limit orders on the books to automatically be matched with inbound orders.
In conjunction with the Securities and Exchange Commission and the other options exchanges, the Amex implemented inter-market linkage for options. The program was rolled out over the first half of the year and now includes all multiple-listed options. Linkage allows specialists on an exchange to access the national best bid or offer at any options exchange.
"In a challenging year in the options industry, the Amex has taken steps to remain competitive and ensure future growth in the options business. We are confident that our floor-based trading volume will improve when ANTE, our new technology platform, is introduced," said Michael T. Bickford, senior vice president of Options.
Pilot Program to Use Amex Closing Prices Standard & Poor's announced in October that it would be participating in a pilot program with the American Stock Exchange to provide standardized auction market closing prices for Nasdaq securities in the S&P 500 Index, the most widely used benchmark to track U.S. stock market performance.
The Amex, which has been trading Nasdaq stocks on the exchange floor for over a year, will provide a single closing price for 12 well-known Nasdaq stocks. If successful, the pilot program, which is set to begin in the first quarter of 2004, could be expanded by Standard & Poor's to include changes in index pricing procedures for closing prices for all Nasdaq securities in the S&P 500 Index.
Brett Redfearn, senior vice president of Business Strategy and Equity Order Flow, said, "We are extremely pleased that Standard & Poor's has selected our market as their first alternative for pricing procedures for Nasdaq-listed stocks. We are confident that the adoption of Amex prices will bring more transparency to the marketplace and provide all investors with an efficient and inexpensive way to get official opening and closing prices."
