2007: Will the NYSE - Euronext merger affect the market?

AUDIENCE MEMBER: Good afternoon, Mr. Buffett and Mr. Munger. Thank you for taking my question.

This is my second time at the Berkshire Hathaway meeting that I have attended. My name is Cameron Sparrow (PH). I am 13-years-old and from Boulder, Colorado.

My question is for Mr. Buffett. Mr. Buffett, what is your opinion about the merger of the New York Stock Exchange with the Euronext?

Do you think that the merger will have a positive or negative effect on the market?

WARREN BUFFETT: Well, I really don’t know the answer to that. My guess is that — I mean, both of those institutions were very large institutions beforehand, and we would judge a positive effect in terms of narrowness of spreads, as an investor, in terms of costs of execution and that sort of thing.

Both places have been very efficient in the past. I mean, we pay quite low payments. Although my broker is here. We probably should be paying even less.

But the New York Stock Exchange has gotten far more efficient in terms of costs from 30 or — from the days of fixed commissions back in the early ’70s and before that. I mean, it’s a fraction of the cost.

And the real test from our standpoint is, you know, do we get better executions and less costly executions. And, like I say, both institutions were big, effective institutions before.

And if they get a little more efficient, I hope it gets passed on to the customers, but it may just result in larger profit.

But we’re pretty satisfied with — quite satisfied, actually — with the functioning of the New York Stock Exchange where we do most of our business.

But we’ve done business — we’ve been buying international stocks, and we’ve had generally good executions throughout the world. So it’s not a source of either concern or enthusiasm to me.

Charlie?

CHARLIE MUNGER: I don’t know anything about it. (Laughter)

WARREN BUFFETT: I don’t either, but I took longer to say so. (Laughter)