Europe Deal Advances Goals, Nasdaq Says
Officials said Wednesday that Nasdaq’s role in the soon-to-be-merged Anglo-German bourse propels its European ambitions and moves it closer toward its ultimate goal of erecting a global market.
Founded in 1971, Nasdaq has grown from a place to trade stocks over the counter to an electronic market that now is the chief rival of the 208-year-old New York Stock Exchange.
Nasdaq’s leadership has worked for years on a plan to penetrate the European equities market, but the pieces fell quickly into place this week. On Wednesday, Europe’s two biggest stock markets, London and Frankfurt, announced plans to merge as well as to link up with Nasdaq to create a market in high-growth stocks.
“We had a vision for Nasdaq Europe. What we have here today gets this done in a matter of months instead of years,” said Frank Zarb, chairman Nasdaq’s parent, the National Assn. of Securities Dealers.
Establishing Nasdaq in Europe, Zarb said, builds a new gateway for U.S. and European investors to trade shares in companies based on either side of the Atlantic.
Yet, Nasdaq’s idea of a seamless, globally linked 24-hour electronic market is still just that, an idea.
Regulatory obstacles, for one, block investors from trading on a worldwide Nasdaq, irrespective of their location.
So Nasdaq’s ability to create the world’s first global electronic stock market hinges on whether it can satisfy demands from regulators in Japan, Germany and--perhaps most important--the U.S.
Under the auspices of what will be Europe’s biggest stock market, “Nasdaq IX” will operate as a separate market focused on smaller, fast-growing companies, absorbing the Deutsche Boerse’s Neuer Markt and London’s TechMark.
Nasdaq’s main hurdle in its quest to go global is Securities and Exchange Commission clearance, said Ian Domowitz, professor of finance at Penn State University.
The SEC has tough disclosure and accounting standards for companies that want to trade on U.S. exchanges, and the idea of globalized trading is something new to the commission, Domowitz said.
“This is a new area in the U.S. to which no one has given a lot of thought, including the SEC.”
Nasdaq’s initial announcement in 1999 about its European plans mirrored a similar effort it had begun in Japan.
Since then, Nasdaq has struck a co-listing alliance with the Hong Kong Stock Exchange, and, last week, it announced it would build “Nasdaq Canada” with the Quebec government. Nasdaq executives are also exploring a co-listing alliance with a stock exchange in Korea. It has had such an arrangement with the Australian Stock Exchange since 1998.
Just as it hopes to do in Europe, Nasdaq wants to be able to deliver access of its top 100 U.S.-listed stocks to Japanese investors. But the plan is to start with the trading of shares in Japanese companies, officials said.
Meanwhile, Nasdaq is considering new rules for trading by U.S. dealers before regular trading hours, officials said Wednesday.
If the proposals are adopted, Nasdaq dealers would be required to let customers get a crack at the prices they themselves get before regular trading starts at 6:30 a.m. Pacific time.
“The bottom line is that benefits from orders are something that need to be passed on to investors,” said Patrick Campbell, Nasdaq’s chief operating officer. “This is a high priority for us.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
In the Rough
Carlsbad-based Callaway Golf (ticker symbol: ELY) said Wednesday it will buy back as much as $100 million of its stock, or about 8.7% of the shares outstanding. Shares of the maker of Big Bertha clubs and other products have fallen almost 10% this year and are well off their 1997 levels. Monthly closes and latest on the NYSE:
*
Wednesday: $15.94, up 6 cents
*
Source: Bloomberg News
