And then there was one.
A Midwest acquisition announced last week would leave the Philadelphia Stock Exchange as the only independent U.S. entity to offer clearance, settlement, and depository services for traders.
Two units of the Chicago Stock Exchange - Midwest Securities Trust Corp. and the Midwest Securities Clearing Corp. - signed a letter of intent to allow a joint venture of the Depository Trust Co. and the National Securities Clearing Corp. to take over their operations.
The elimination of two competitors raised the specter of higher prices and less service for the smaller banks and bank broker-dealers that are clients of the Midwest Securities businesses, which have been around for over 20 years.
Depository Trust and National Securities Clearing will jointly pay $22 million to acquire the two firms.
At the same time, Depository Trust will continue to operate the business at the Securities Trust Co., a subsidiary in Jersey City.
Closing down the Midwest operations will leave only one independent clearing provider and one settlement provider, the Stock Clearing Corp. of Philadelphia and the Philadelphia Depository Trust Co., both subsidiaries of the Philadelphia Stock Exchange.
The Philadelphia operations plan to remain independent, and view the transaction as a strategic advantage, leaving them as the only alternative to the much bigger operations.
"There are an awful lot of people who want a choice," said Nick A. Giordano, president of the Philadelphia exchange and chairman of the subsidiaries.
Depository Trust holds 98% of the custodial assets in the United States, and National Securities Clearing processes 97% of all equity and bond transactions in the U.S.
Some small Midwest brokerage houses said they prefer the Chicago exchange's operations to those based in New York.
"Being a small regional firm, we felt comfortable working with Midwest," said Kathy S. Wise, the brokerage operations manager at Bartlett & Co. in Cincinnati. "They're smaller and closer to our geographic region, and we felt we could communicate with the people well."
Barring any unexpected regulatory hurdles from either the Securities and Exchange Commission or the Fed that stop the deal, Bartlett and a host of others will need to establish relationships with both Depository Trust and National Securities Clearing.
The Chicago exchange said that it felt compelled to focus more on its core businesses.
Some bankers expressed concern that the loss of the Midwest operations eliminates a viable alternative to Depository Trust.
To be sure, some bankers viewed the acquisition as a positive event.
"Our view is that this is good for the industry and should be good for our customers," said John G. Alexander, president of the operations group at Banc One Corp.
Banc One, which currently uses Depository Trust Co., said that the potential for errors was greater when all the firms were involved in a transaction.
"This (acquisition) reduces the number of handoffs in the process and should reduce any error rates that come as a result of that," said Mr. Alexander.
Stephen H. Cartwright, the president of Sweney Cartwright & Co. in Columbus, Ohio, agreed. "I've enjoyed working with the people from the Midwest, who were always innovative," he said. "But I guess the market has gotten large enough (to warrant closing the Midwest operations)."
