While the takeover battle between the NASDAQ and the London Stock Exchange rages on, the lesser-known American Stock Exchange (AMEX) has hired Morgan Stanley to begin the process of demutualization, presumably setting the stage for an initial public offering (IPO). The IPO comes after numerous exchanges/trading companies have gone public in recent years including the Chicago Mercantile Exchange, New York Stock Exchange and, regrettably, Refco.

The AMEX is definitely the least-respected of the major exchanges. I once mentioned a company to an older stock broker friend and asked him what he thought of the company. The first thing he said was "Ah! The AMEX! That's where bad stocks go to die." The AMEX will also continue to face competition for listing from the OTC market and even the Pink Sheets, where it is taking steps toward greater transparency and scrutiny of companies, perhaps setting the stage for a better reputation. The Pink Sheets is widely known as a great place to find penny stock pump and dumps.

In addition, the high costs of Sarbanes-Oxley will, in my opinion, lead more companies to seek private funding, leading to fewer IPO's in the future. The AMEX may do great, but it's not an IPO I'll be buying into.