The Nasdaq – a good catch in the market for a partner

Nasd

Nasdaq stock exchange, second only to the New York Stock Exchange (NYSE) in size, was founded in 1971 by the National Association of Securities Dealers.

When it began trading on 8 February 1971, Nasdaq (National Association of Securities Dealers Automated Quotations) was the world’s first electronic stock market.

It was also the first stock exchange in the world to start trading online.

Now, however, exchanges across the world have caught up in technological terms and both the Nasdaq and the NYSE are losing ground as a result.

In fact, the number of US stock listings has plummeted by 43 per cent since its peak in 1997, while the number of listings outside the US has more than doubled in the same timeframe.

NYSE BID
That’s why Nasdaq’s current owner, the Nasdaq OMX group, tried recently to tempt the board of NYSE Euronext, which runs the rival NYSE as well as a number of European exchanges, with a takeover bid offered jointly with futures exchange IntercontinentalExchange (ICE).

The aim was to break up NYSE Euronext’s planned merger with Germany’s Deutsche Boerse by offering a larger bid.

Nasdaq and ICE offered $11.3bn (£6.89bn) in cash and shares, 19 per cent more than Deutsche Boerse, in a deal that would have seen Nasdaq take the stock markets and ICE take Liffe, the UK futures market owned by NYSE Euronext.

ANTITRUST OPPOSITION
But Nasdaq OMX and ICE dropped their bid on 16 May after the US Department of Justice told Nasdaq chief executive Bob Greifeld that it opposed the merger and would file an antitrust lawsuit to stop it.

Christine Varney at the Department of Justice commented: “The acquisition would have removed incentives for competitive pricing, high quality of service, and innovation in the listing, trading and data services these exchange operators provide to the investing public and to new and established companies that need access to US stock markets.”

BRIEF INTERLUDE
Greifeld has put a brave face on the disappointing outcome, describing it as an “opportunistic move” that constitutes no more than a “brief interlude” from which the exchange is already moving on.

“Certainly we are disappointed with the outcome, but we felt we owed it to our shareholders and our customers to consider this proposal and ultimately to pursue it,” he said.

Few expect it to stand idly by while Deutsche Boerse seals its $9.8bn deal to buy NYSE, creating the world’s biggest exchange, though.

FUTURE TARGETS
And there are now rumours circling that Nasdaq, left on the sidelines, could look to strike a deal with either the London Stock Exchange (LSE) or the Singapore Exchange.

There is history between Nasdaq and the LSE. Greifeld has spoken in the past of how a London merger could pool liquidity between Nasdaq and the City.

And in 2006 he offered £12.43 a share for the LSE, which is now valued at just 885p a share, or £2.4bn.

However, Xavier Rolet, chief executive of the LSE, denied last week that he was in talks with Nasdaq OMX, arguing that he was still focused on a merger with Toronto stock exchange owner TMX Group, despite a rival hostile bid for TMX from Maple Group.

MAJOR NASDAQ LISTINGS

● APPLE
The iPod manufacturer was incorporated in 1977 under the name Apple Computer. That name stuck until 2007, when it became simply Apple to reflect the company’s expansion into consumer electronics. The company has around 50,000 full-time employees worldwide and has a market cap of $300bn.

● MICROSOFT
Microsoft is headquartered in Redmond, Washington. Established in 1975, its well-known products include Microsoft Windows and Microsoft Office. More recently, it has diversified into video games with the Xbox consoles.

● ORACLE
Oracle specialises in developing and marketing hardware systems and software for businesses. Headquartered in Redwood Shores, California, it employs more than 100,000 people around the world and has a market cap of $158bn.

● VODAFONE
London-based Vodafone is the only British company to make the Nasdaq top five. In fact, it is the only company headquartered outside the US to do so. It operates networks in more than 30 countries and has over 340m customers.

NASDAQ: FACTS AND FIGURES

● location
4 Times Square, New York, US

● OPENING TIMES [LOCAL TIME]
Pre-Market Trading Hours: 7am
Market Hours: 9.30am
After-Market Hours: 4pm

● CLOSING TIMES [LOCAL TIME]
Pre-Market Trading Hours: 9.30am
Market Hours: 4pm
After-Market Hours: 8pm

● MARKET CLOSURES
January 17, February 21, April 22, May 30, July 4, September 5, November 24, December 26

● CURRENCY
US dollar

● NUMBER OF LISTINGS
About 2,850 companies

● VOLUME
$13,439bn (end of 2010)

● MARKET CAPITALISATION
$4,931bn (end of 2010)