More potential......Will Nasdaq itself be the next hot IPO?
Zarb: Market may trade futures, starting with Treasurys
By Rex Nutting, CBS MarketWatch
Last Update: 3:48 PM ET Jun 23, 1999
See: Bond Report
WASHINGTON (CBS.MW) -- The next hot initial public offering could
well be the Nasdaq Stock Market itself.
Frank Zarb, chief executive of the Nasdaq's parent, said Wednesday that
the National Association of Securities Dealers is considering spinning off
the market ($COMPQ: news, msgs) from the regulatory arm and may
even sell stock in the market to the public.
"Our thinking is to open up our stock markets to
investment from market participants and eventually
the public, so they can participate in our growth
and financial success and so we can raise the
needed funds to grow and continue to modernize,"
he explained.
Zarb said the Nasdaq is also talking with Wall
Street firms about starting a for-profit venture to
electronically trade futures contracts, starting with
U.S. Treasurys.
Zarb outlined the Nasdaq's strategy to remain the
world's largest exchange as advances in information
technology create a network of markets open 24
hours a day around the world.
"The best way to deal with this changed world is to
embrace it, not to fight it or slow it," he said.
"In a very few years, trading securities will be
digital, global and accessible 24 hours a day," he said in a luncheon
speech to the National Press Club.
Zarb said the Nasdaq's recent merger with the American Stock
Exchange; its new partnership with Softbank in a Nasdaq-style market for
Japan; and its pending deals in Hong Kong, Australia and China are all
part of its strategy of becoming an essential link in the global network of
stock exchanges. See NASD's press release.
The Nasdaq itself may be spun off as a publicly traded company, Zarb
said, giving the market access to more capital and eliminating the conflict
of interest that arises when the regulator (the NASD) owns the market
(Nasdaq-Amex).
Zarb suggested that the NASD's regulatory arm could eventually be
merged with the New York Stock Exchange's regulatory body.
"The underpinning of all this change has to be to do what is best for
investors and companies," Zarb said.
Zarb said Nasdaq has already evolved in response to the changing
environment, but he criticized the New York Stock Exchange for its rule
that "makes it impossible for companies to seek the best market for their
shares and move from the NYSE once they are listed."
"Large companies like GE and IBM may do better trading on the Nasdaq
than on the NYSE," Zarb said, just as Microsoft and Intel "find maximum
liquidity" on the Nasdaq.
He also said electronic communications networks have an unfair
advantage over market makers in the Nasdaq because they are able to
charge fees for the access to buy and sell orders.
The highest-profile change -- after-hours trading -- is coming soon, Zarb
said. A summit called by the Securities and Exchange Commission on
June 30 will bring the New York Stock Exchange and the Nasdaq into
talks with regulators on ensuring an orderly transition to extending trading.
"Investors would be best served if the industry could move to new hours
in a coordinated way," Zarb said.
Rex Nutting is Washington bureau chief for CBS MarketWatch. |
