DEAL WATCH: BIG BOARD MEMBERS WONDER: IS GRASS GREENER IN GARDEN STATE? STOCK EXCHANGE DENIES THREAT TO MOVE TO JERSEY A WAY TO USE MUSCLE ON NEW YORK CITY OFFICIALS

Yeah, right.

That’s the attitude on Wall Street about whether the New York Stock Exchange would ever move to New Jersey.

Earlier this month, exchange Chairman Richard A. Grasso informed his board that he is talking to New Jersey officials about moving across the Hudson River. But the chairman’s own constituency thinks he’s bluffing in order to extract a better deal out of New York.

Exchange members say that moving to New Jersey would be an inconvenience and one they would support reluctantly.

“It would be very hard to move the exchange out of New York,” says William P. Behrens, chairman of Ernst & Co., a member firm located a few blocks south of the exchange. “This is all hype and politics — Grasso and (Mayor Rudolph) Giuliani are playing a game of chicken.”

Everyone agrees that the Big Board has outgrown its home at 11 Wall St. The number of stocks traded there has almost doubled over the past 10 years, and average daily trading increased 28% in 1997 alone.

Until this month, however, the exchange’s expansion plans centered on lower Manhattan. The exchange had wanted to expand at its current site, but its interest waned when it became apparent that it might take years to acquire nearby property and overcome preservationists’ objections. The exchange is now considering building a 1.2 million-square-foot building in nearby Battery Park City.

Mr. Grasso told exchange board members that New Jersey officials had approached him with a plan to move the exchange to Jersey City. The New Jersey press reports that the NYSE did the approaching, something the exchange denies.

Should negotiations with New Jersey become serious, the exchange would likely face objections from some member firms. Exchange specialists, most of which have their headquarters on or around Wall Street, would be forced to move. Investment bankers and traders would no longer be able to walk top clients over to the trading floor. And, of course, Jersey City lacks a … je ne sais quoi.

“One of the things the exchange offers is prestige, and there would be repercussions if they ever moved to New Jersey,” says one specialist.

Other members are less concerned.

“The members who work on the floor might care, but I don’t think we would,” says Nathan Gantcher, vice chairman of CIBC Oppenheimer, a Canadian-owned brokerage and investment bank.

The exchange denies that its interest in New Jersey is just posturing.

“We’ve said from day one that we want to stay in New York,” says a spokesman. “It wasn’t until it became public that we were discussing a site in Battery Park City that New Jersey called us and said, ‘If you really are considering moving west of Wall and Broad, would you go one more mile?’ We said, ‘Tell us what you mean.’ ”

Although New Jersey officials have declined to discuss their pitch, in all likelihood it hinges on the Jersey City enterprise zone and its sales tax exemptions.

huge moving grant

“New Jersey can also offer an enormous (relocation) grant based on the income taxes that would be generated by the new employees,” says George A. Tobjy, a senior manager and relocation expert at KPMG Peat Marwick

“As much as 80% of those income taxes would go back to the exchange as a grant to help lower the cost of developing a site.”

Mr. Tobjy believes that the exchange’s interest in New Jersey is no ploy. Any such move would have a devastating effect on the lower Manhattan real estate market.

“It would be the most significant occurrence to negatively affect the market since the recession of the late 1980s,” says Bruce E. Surry, a senior managing director with real estate broker Insignia/ESG.

“A move of the stock exchange would result in the move of many people who need to work near the stock exchange — clearing firms, technology companies, specialist firms, small brokerage firms, etc.

“And it would probably accelerate the conversion of certain office buildings downtown to residential properties.”

Crain News Service