One of the interesting little tidbits in the Goldman Sachs earnings report today – the company took a $305 million impairment write-down against its “Designated Market Maker” rights at the New York Stock Exchange. What that’s referring to is the old specialist business that Goldman owned through Spear, Leads & Kellogg.
Once upon a time, before technology became such a big part of our lives, traders called specialists made markets in a stock. He/she matched buyers and sellers from orders over the phone. If someone wanted to buy but no sellers were available, the specialist became the seller. Or vice versa. But as technology became more prevalent, it became apparent you didn’t that brokers to so the matching of orders.
This intangible asset (it’s market making unit on the floor of the New York Stock Exchange) had a carrying value of $391 million at the end of the September. With that $305 million write down, it is carried at $86 million. In some ways you wonder why Goldman didn’t write off the entire amount.
Others in the same business: Barclays and Bank of America. Look to see what they do as well. And Labranch, the only publicly traded specialist.