see bold, from wsj online europe:
October 27, 1999
Nasdaq Idea: Market Plan For Pan-European Market
By SILVIA ASCARELLI
Staff Reporter of THE WALL STREET JOURNAL
LONDON -- The Nasdaq Stock Market, continuing an aggressive international push, is feeling out European securities firms about their willingness to back a pan-European stock market.
The plan calls for the new Nasdaq market, tentatively called Nasdaq Europe, to launch in the first quarter of 2001, according to officials at firms who attended Nasdaq's pitches over the past two weeks.
Success is far from ensured, because the proposal comes at a time when the field is increasingly crowded. Already, three other plans for pan-European markets are in the works -- one from eight national stock exchanges that have banded together; a second from Britain's Tradepoint Financial Networks PLC, a for-profit electronic exchange; and a third from Easdaq, already a Europe-wide market for growth stocks. OM Gruppen AB, which runs the Swedish Stock Exchange, is studying a similar idea.
But competition hasn't staved off Nasdaq's other foreign forays. The market has a stated goal to link all the potential markets for its stocks, which include large companies such as Microsoft Corp., as well as hundreds of small firms, through one combined electronic network.
Nasdaq, a unit of the National Association of Securities Dealers, in June teamed up with Japanese venture-capital firm Softbank Corp. to form Nasdaq-Japan. The all-electronic market is slated to make its debut a year from now and will initially trade the top Nasdaq stocks during Japanese trading hours and all Nasdaq stocks during U.S. hours. Nasdaq also has an alliance to co-list stocks with the Australian Stock Exchange.
A Nasdaq spokeswoman in London declined to comment on plans in Europe. A spokesman in New York said the market has held talks with European bourses about alliances and linkups but didn't elaborate.
Nasdaq's plan for Europe could be more aggressive than those of its competitors, though it isn't clear which securities a new market would trade. It wouldn't necessarily limit itself to the top 300 or so blue-chip European stocks, as the eight-bourse alliance and Tradepoint plan to do, nor would it necessarily limit itself to growth and technology companies, as Easdaq wants to do, bankers say.
Should the plan go ahead, Nasdaq could trade any stocks listed on Europe's bevy of national exchanges without seeking permission from the companies or requiring them to formally list on Nasdaq.
Details on when the market may make an announcement also remain sketchy, and it is unclear whether the market will be an electronic matching system or, like Nasdaq itself, a network of linked dealers. Bankers say they have been told that the project already has financial backers but reports on who those backers are vary.
While a Nasdaq Europe certainly would put more pressure on similar ventures by other bourses, several bankers are skeptical about the plan taking off. It doesn't address the most costly aspect of European share dealings, which is the national networks for trade processing, or clearing and settlement, bankers say, but instead adds another costly trading system that must be financed by users.
While bankers have said they would welcome a single European stock market, they have said that a new trading system would offer little to their existing ability to access most exchanges through a single trading screen.
Moreover, a 2001 launch for Nasdaq Europe, which some already consider ambitious, would put it as much as a year behind Tradepoint and Easdaq, which want to launch their new strategies early next year. Even the pan-European alliance plans to link the eight bourses by November 2000.
In addition to those hurdles, a Nasdaq Europe must become a recognized investment exchange and install a trading system, as well as persuade investors and brokers to use the exchange.
In meetings with U.S. and European firms, including those who have invested in Tradepoint, Nasdaq has stressed its strong position in the U.S. market and argued that it could consolidate a fragmented European stock-exchange market, bankers say. But it hasn't elaborated on the extent of any savings that could be generated or how else it would differentiate itself from other initiatives.
Nevertheless, Nasdaq can't be counted out. "They [Nasdaq] have got a big job ahead of them," said one observer of market developments in London. "But the way the market is changing, you can't rule out any option." He added that he is keeping an open mind.
The other ventures could stumble or grind to a halt. The eight-bourse alliance, launched with much fanfare between the London Stock Exchange and the German stock exchange, the Deutsche Boerse, in July 1998, has only inched ahead, much to the frustration of investors and brokers. The financial-services firms that now control Tradepoint, which was nearly broke after four years of trying to rival the London Stock Exchange, have yet to back up their investment with trades. Easdaq has yet to implement its strategy.
Nasdaq has been making other efforts to cut costs for European investors trading its stocks. Last week it announced a link between the United Kingdom's CrestCo and the U.S.'s Depository Trust Co., which provide trade-settlement services in their respective markets.
--Terzah Ewing in New York contributed to this article.
Write to Silvia Ascarelli at silvia.ascarelli@wsj.com and Terzah Ewing at terzah.ewing@wsj.com
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