"With so much attention focused on larger, more liquid stocks, smaller companies-the Mainstream and Main Street businesses at the core of our economy-don't always get the specialized attention they need and deserve," Mr. Sodano said to business leaders gathered at the Fairmont Hotel.
"A one-size-fits-all solution for public companies is neither feasible nor appropriate," he noted, emphasizing that more than 60 percent of stocks listed on the American Stock Exchange, New York Stock Exchange, and Nasdaq National Market trade fewer than 100,000 shares per day. "Better price discovery, such as is available in a well-run auction market, helps protect investors in such companies from inappropriately large share-price fluctuations," Mr. Sodano explained.
Small companies represent 99 percent of all United States employers, provide 75 percent of net new jobs and account for more than 90 percent of exporters, Mr. Sodano pointed out. These Mainstream and Main Street businesses need support from the broader financial community in order to grow and prosper in the years ahead.
"During the past five years, we have seen some of the most stressful and unpredictable times in the capital markets in recent memory," Mr. Sodano reminded the group, citing the direct and indirect impact of the September 11 terrorist attacks, the damage to investor confidence from corporate and accounting scandals, and the restructuring of the markets themselves.
But the American Stock Exchange "has persevered and succeeded during these uncertain times," Mr. Sodano noted, "bolstered from our commitment to the small- and mid-cap companies that make our exchange their home." Mr. Sodano also cited the Amex Composite Index's consistent outperformance of other major indexes, including the Dow Jones Industrial Average, Nasdaq Composite, and New York Stock Exchange Composite, during this period.
"We've created a diversified Amex, strengthening it through three strong core businesses," Mr. Sodano said. "We are a vital national marketplace for equities. We pioneered and continue to list exchange traded funds (ETFs), including familiar names such as SPDRs, tracking the S&P 500, and DIAMONDS, tracking the Dow Jones Industrial Average. We are also a market leader in closed-end funds and structured products, and have one of the largest options exchanges in the U.S., trading stock and index options."
For the nine months ended September 30, the Amex listed 66 companies, compared to 48 for this same period last year, which is a 38 percent improvement. The Amex also listed 20 exchange traded funds, 10 closed-end funds and 91 structured products.
The Amex Composite Index (XAX) is up more than 11 percent during the first ten months of this year and 58% over the past three years, outperforming the Nasdaq Composite, New York Stock Exchange Composite, Dow Jones Industrial Average, Russell 2000, S&P 500 and Dow Jones Wilshire 5000 indexes during the same periods.
Continuing his discussion of the importance of helping smaller businesses deal with a global economy, Mr. Sodano said: "Mainstream and Main Street companies are not getting the attention they deserve, and I hope to see this change."
In an auction market, a specialist risks his or her own capital to moderate excessive price movements and volatility until buyers and sellers can meet directly. In most circumstances, this helps companies avoid fluctuations from trade to trade often seen on "over-the-counter" markets.
"Our experience shows,"Mr. Sodano said, "that small- and mid-cap companies are better served if their shares get the more personalized attention of a specialist/auction market."
Mr. Sodano further discussed the Amex long-term record of support for such companies, as they seek to raise equity capital and increase visibility within the investment community. "The Amex believes it is important for smaller organizations to create equity incentives for their key employees, while enabling founders to realize some liquidity besides the actual perspiration of their 'sweat equity.'"
He urged action from the broader investment community in support of smaller companies: "We believe to the extent that we can help, we're doing a pretty good job at the Amex, but it's in everyone's interest to support smaller businesses in ways that help them compete in the global economy."
