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"A 'one-size-fits-all' solution for public companies is neither feasible nor appropriate," Mr. Sodano said. Shares of what he calls Mainstream and Main Street businesses "need the volatility protection and the better price discovery of an auction market." That kind of market helps protect investors in such companies from inappropriately large share-price fluctuations, he explained.
Mr. Sodano noted that more than 60 percent of companies listed on the American Stock Exchange, New York Stock Exchange, and Nasdaq National Market trade fewer than 100,000 shares per day. "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," he asserted.
"We know that 99 percent of all United States employers are small businesses, providing 75 percent of net new jobs and representing over 90 percent of all exporters," said Mr. Sodano, who also pointed out that exports have accounted for a significant portion of the nation's economic growth. "These Mainstream and Main Street businesses need support from the broader financial community in order to grow and prosper in the years ahead," he added.
The past five years 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-sized companies that make our exchange their home." Mr. Sodano also cited the Amex Composite Index's consistent out-performance 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," he said.
The Amex pioneered and continues 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. Assets in Amex-listed ETFs have grown to more than $200 billion.
"The Amex is also a major options exchange in the United States, trading stock options and index options. And we are a market leader in closed-end funds and structured products," Mr. Sodano said.
For 2004, the Amex listed 90 companies, up 18 percent from 2003. The Amex also listed 22 exchange traded funds, 12 closed-end funds and 115 structured products.
The Amex Composite Index (XAX) was up more than 22 percent during 2004 and 69 percent 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.
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 small - and mid-sized companies are better served if their shares get the more personalized attention of a specialist/auction market," he said.
Mr. Sodano further discussed the Amex long-term record of support for such companies, as they seek to raise equity capital and increase visibility with 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."
