NYSE Euronext CEO John Thain warns that the ample supply of liquidity which is driving the private equity takeover boom won’t be there forever. “Things go in cycles…that’s probably not going to continue forever,” he told the Reuters Exchanges and Trading Summit when asked about the huge supply of capital at low interest rates and credit spreads. He also warned that he saw the greatest risk of a sudden threat to liquidity since the summer of 1997.

Philadelpia Stock Exchange CEO Sandy Frucher said he got one of the biggest come-uppances in his life when he first looked into how to be competitive with the fastest trading technologies - which 18 months ago would execute trades in 5 milliseconds.

“I found out we could develop a machine or a technology system that would execute at 5 milliseconds. But we’re in Philadelphia, so it takes 3 milliseconds to send the message back and forth,” he said. This led him to make a $6 million decision to co-locate, or to establish some machines closer in proximity to the source of where orders come in.

“Since that decision was made, the standard has gone down to sub-1 millisecond,” he said.

Bob Greifeld, the CEO of Nasdaq, said he could imagine opening up an exchange in Second Life - a virtual world on the Web where avatars interact in a 3-D universe.

“It’s a possibility,” he said, although when pressed as to when, he said, “Now you’re going too far. It’s interesting.”

He also said he did not believe this alternative world had quite matured enough to have a viable economy of its own.

Second Life has more than 6 million registered users and is supported by its own currency, the Linden dollar, which can be exchanged for U.S. dollars. Second Life has become a new stomping ground for mainstream businesses such as Reuters, IBM and GM - who have all establish beachheads there.

Tim Mahoney, the chief executive of BIDS, says that what block trading venues are designed to do – execute institutional investors’ equities trades without signaling their intentions to the broader market — is just a technologically advanced way of doing what floor specialists at NYSE have done for years. That’s a lesson he learned first hand as a 17-year-old working on the floor of the New York Stock Exchange, Mahoney said, speaking to reporters at the Reuters Exchanges and Trading Summit.

American Stock Exchange Neal Wolkoff told the Reuters Exchanges and Trading Summit that while its downtown New York City stock exchange trading floor isn’t yet on the market, the exchange recognizes that it’s an increasingly valuable asset as the Manhattan commercial real estate market booms. “The visible work on the World Trade Center property, I think really gives people a sense that downtown is in line for a rebirth,” he said.

Neal Wolkoff, the chief executive of the American Stock Exchange, says there’s no shortage of interest in mergers or takeovers in the exchanges space in general - and that goes for Amex as much as its rivals. “Everybody is talking to everybody,” he told the Reuters Exchanges and Trading Summit. “It’s a veritable beehive of discussion.”

Neal Wolkoff, CEO of the American Stock Exchange, has a plan to stay ahead in the area of Exchange-Traded Funds, or ETFs. While ETF’s have traditionally been built to track a fixed index, Wolkoff explained to the Reuters Exchanges and Trading Summit that the Amex has patented software which allows ETFs to track an actively managed portfolio of stocks. Amex, which is in talks with potential issuers for such an actively managed ETF, sees such securities as having some key advantages over mutual funds. For one thing, they would offer more price transparency. For another, they’d be more liquid, since investors could buy or sell them any time during the day at their price at that moment, unlike mutual funds, which are only priced once a day.

Investment Technology Group CEO Robert Gasser told the Reuters Exchanges and Trading Summit that the electronic stock trading services provider is on the prowl for acquisitions, especially for derivatives-related deals. Of particular interest are “contiguous asset classes,” such as equity derivatives and foreign exchange. ”there’s a morphing today of cash equities and equity derivatives” in the U.S. market which makes equity derivatives a particularly compelling part of the market, he said.

Robert Gasser, chief executive of Investment Technology Group, told the Reuters Exchanges and Trading Summit that the pace of change on the floor of the New York Stock Exchange’s trading floor is picking up, leading him to question how long any kind of specialist will be needed there at all. “I just don’t know at this point in time what humans are really doing down there other than opening stocks and closing stocks,” he said.