Taking Nasdaq public doesn't worry CEO
Mon Feb 25, 6:27 AM ET
Noelle Knox USA TODAY
NEW YORK -- The clock is ticking for Hardwick Simmons.
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By year's end, the CEO of Nasdaq Stock Market aims to turn it into a full-fledged stock exchange and a for-profit, public company. He also plans to launch a new trading platform and increase Nasdaq's global reach.
If only it were that easy. Among his challenges:
* Investor confidence is still stinging from the bursting of the technology stock bubble.
* Nasdaq stocks, like Krispy Kreme and E-Trade, continue to jump to the New York Stock Exchange (news - web sites).
* Nasdaq is under siege from competing electronic communications networks (ECNs), like Instinet.
But with the exception of competition, Simmons isn't worried. For him, the hardest part of the job is dealing with ''out of the blue'' market grenades like Enron, an NYSE-listed company that has undermined confidence in NYSE and Nasdaq companies alike.
''What I can't control is some guy . . . who knows exactly where he's going, but is getting so many pats on the back that, frankly, he doesn't have the courage to stop the train and say, 'OK guys, we're wrong, let's take our punishment,' '' Simmons says.
Spurred by Enron's collapse, Nasdaq ran full-page newspaper ads last week outlining eight key beliefs about accounting, public disclosure and ethics. To diffuse any more accounting land mines, Nasdaq for the first time will host seminars across the country to help educate its 4,500 companies about the spirit, rather than the letter, of accounting rules.
''It doesn't make any difference how fair and transparent you make the trading systems at Nasdaq if you suspect the information underneath the marketplace,'' he says. ''It's the Achilles' heel of what we've built here. We've got to get right on this, and we will.''
Simmons knows what it is like to be on the inside of a company engulfed in scandal. He is credited with reviving Prudential Securities after its disastrous experience selling limited partnerships in the 1980s.
When he joined Nasdaq last February, his reputation and experience drew great praise. But his plan for a new trading platform to compete against ECNs -- which accounted for 35% of Nasdaq volume last year -- has drawn criticism. Nasdaq's new trading model is called ''Super Montage,'' and Simmons also wants to use it in Nasdaq's operations in Japan and Europe.
''If Nasdaq really wants to be a competitor and compete with its members, we think it needs to give up some of its monopoly advantages,'' says Doug Atkins, head of Instinet, one of the largest ECNs.
Firms that trade Nasdaq stocks pay fees to Nasdaq to display quotes, execute and report trades. Atkins is irked that Nasdaq is using some of those fees to build a competing system and still making the rules.
But when Nasdaq becomes a publicly traded company itself, it will distance itself further from the Wall Street firms, including separating from the self-regulatory National Association of Securities Dealers.
''Becoming a public company will allow them to make some of these changes, because they will no longer have to have the vote of the membership,'' says Daniel Weaver, professor at Baruch College in New York. ''Convincing Nasdaq members to change is good, but it is going to be extremely difficult.''
Simmons says Nasdaq's IPO should be between October and December. And while some have pressed him to move up the date, Simmons says it is more important to ensure the launch of Super Montage goes smoothly this summer. ''We can't afford to fall on our face two quarters out, so we better darn well be sure the major pieces of Nasdaq are in place,'' he says.
Simmons, 61, is planning to stay in this job for two or three more years. After that, he is going to fulfill a lifelong dream of learning to play the piano. Then the only ticking sound he will care about is a metronome. |
