>>Nasdaq: European Leg An Important Step
By Huw Jones
LONDON (Reuters) - Nasdaq, the world's second-largest stock market, said Friday's launch of its Nasdaq-Europe unit was
an important first step in its ambitions for global 24-hour trading. [Eeeek!]
Earlier this year Nasdaq took a controlling stake in ailing pan-European exchange Easdaq, revamping it into Nasdaq-Europe,
which began using a new trading system and rule book on Friday.
``This is our first electronic step in Europe and probably not our last,'' Nasdaq Stock Market Inc Chief Executive Wick
Simmons told reporters by telephone.
Bourses and alternative trading systems are competing to become the cheapest regional share trading platform in Europe as
investors look to trade across borders, helped by the euro wiping away currency risks.
``In our plan for what we would like Nasdaq-Europe to look like, we may well get involved in further alliances so we can
become the major choice of liquidity on a pan-European basis,'' Simmons said.
``We would expect to add other alliances or to combine our platform with another alliance before the Nasdaq dream is fulfilled
on the European continent.''
The new trading system started up smoothly, Nasdaq officials said, but declined to give any precise volumes.
Nasdaq, whose U.S. operation lists global technology names like Microsoft and Intel, now has a trading platform in all three
main time zones, Americas, Europe and Asia -- its Nasdaq-Japan is a year old.
Simmons played down likely trading volumes in the early months, saying dealings were likely to pick up later in the year when
electronic order-book trading is bolted on to Nasdaq-Europe's current dealer market-making system.
A central counterparty to guarantee completion of trades, and netting to cut down on the number of trades for settlement, will
be added early next year to boost volumes too, Simmons said.
Dealing and settlement will cost as little as 26 U.S. cents per trade due to the involvement of U.S. central clearing and settlement
house DTCC.
Nasdaq-Europe aims to become the initial public offering (IPO) market of choice for European companies, and the lowest-cost
platform for European and U.S. blue-chip secondary-market trading and settlement.
GROWING COMPETITON
On Monday, the London Stock Exchange is extending the number of U.S. shares it trades. Frankfurt's Deutsche Boerse last
week unveiled plans to trade U.S. shares from September as part of its ambition to become Europe's pre-eminent exchange.
The LSE and Deutsche Boerse both have growth-stock segments that will compete with Nasdaq-Europe for company floats.
Pan-European exchange virt-x, created by the merger of UK electronic exchange Tradepoint and the Swiss blue-chip bourse
segment, launches on June 25.
Global agency broker Instinet, owned by Reuters Group Plc, is also looking to beef itself up with the cash raised from a
successful float last month. Reuters also helped build Nasdaq-Europe's new platform.
But industry experts say all players will find it difficult to drum up decent trading volumes in shares not listed on their own
exchange.
NEW SHAREHOLDERS
Nasdaq-Europe also said on Friday that eight banks have taken stakes in the company, with more being lined up. The U.S.
Nasdaq market remains the majority shareholder, but declined to say what stakes the other new and existing shareholders hold.
The eight are: U.S. market maker Bernard L Madoff; French bank BNP Paribas; Swiss bank Credit Suisse; Belgian-Dutch
financial house Fortis; three Wall Street investment banks -- Goldman Sachs, Lehman Brothers and Schroder Salomon Smith
Barney ; and Spain's Santander Central Hispano Investment.
U.S. market-maker Knight Trading Group is already a significant investor.<<
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