The NSX isn't just some Johnny-come-lately to the exchange business. It's 123 years old. Founded in 1885 as the Cincinnati Stock Exchange, NSX eliminated its physical trading floor in 1980 and became an all-electronic stock exchange. The Cincinnati exchange moved to Chicago in 1995, and became the National Stock Exchange in 2003. Originally a nonprofit corporation, it's now a for-profit company. Its investors include Merrill Lynch, Credit Suisse, Citigroup, JPMorgan Chase, Knight Capital Group and Bloomberg. The new $10 million trading platform went live in January 2007.

Rizzello isn't just some guy jumping on the ETF bandwagon, either. He was on the Philadelphia Stock Exchange team that created the Cash Index Participation shares (CIPs)--a precursor to the ETF. This first exchange-traded ancestor to the ETF lived only three months in 1989, four years before the launch of the Spider. Rizzello later moved to Vanguard to help create the Vipers, the original brand name for Vanguard's ETFs.

But there are dark clouds entering Rizzello's view over the Hudson. The NSX could potentially lose its two biggest clients, or half its business, over the next 12 months. BATS Trading, the third-largest U.S. equity market, and Direct Edge, another trading venue, are expected to become licensed stock exchanges this year. Regulations have required the two firms to quote their trades through a licensed exchange; in this case, the NSX. But once they become full exchanges, they can quote their own trades.

The NSX plans to generate business from the traders locked out of the discounts given to the big clients of the NASDAQ and NYSE Arca. Such traders include mid-level broker-dealers, private high-frequency trading shops, specialists and market-makers.

"We always knew and understood that they would seek an exchange status," says Rizzello. "It's not a surprise. We planned for it and that's why we implemented the new pricing schedule. We expect that by the time they leave, we will have replaced the bulk of that order flow. We know it's not an easy process, and no doubt, it's a big challenge. But I'm happy with the success so far and believe we'll be successful at the end of the day."

Does NSX have the size and scope to compete with the better-capitalized firms in the business? Time will tell. But for now, with their aggressive rebates and discounts, they're making a serious run at it in the ETF arena.

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