Nasdaq, Inc.

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NASDAQ, Inc.
NASDAQOMXlogo.png
Founded Feb. 27, 2008
Headquarters New York
Key People Robert Greifeld, CEO
Employees 3,300+ employees
Products Exchange offering products covering multiple asset classes
Twitter @NASDAQ
LinkedIn Profile
Facebook Page
Website www.nasdaq.com
We visit more than 100 websites daily for financial news (Would YOU do that?). Read the John Lothian Newsletter.

NASDAQ, Inc. owns and operates 26 markets, including one clearinghouses and five central securities depositories. The Nasdaq Stock Market is its primary equity-trading market.[1] [2] It is the second largest stock exchange by market capitalization, after the New York Stock Exchange.[3]

NASDAQ provides trading, exchange technology and public company services across six continents, and for more than 3,900 companies. This includes a U.S. listings market; the OMX Nordic Exchange, including First North; and the 144A PORTAL Market. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and ETFs. NASDAQ's technology supports the operations of more than 60 exchanges, clearing organizations and central securities depositories in more than 50 countries.

NASDAQ, Inc. was ranked as the eleventh-largest derivatives exchange in the world by contract volume in 2015, according to the annual Futures Industry Association's (FIA) survey.[4]

OMX Nordic Exchange is not a legal entity but describes the common offering from NASDAQ OMX Group exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius.

On June 30, 2016, Nasdaq acquired the International Securities Exchange from Deutsche Borse, giving Nasdaq a total of six US options trading venues. As of June 1, 2016, Nasdaq's ISE options exchanges combined represented 15.1 percent of equity options market share, according to OCC data. And with Nasdaq's exchanges' - Nasdaq Options Markets (NOM), Nasdaq OMX BX and Nasdaq OMX PHLX - 24.2 percent market share in equity options volume, has a combined 39.3 percent of the equity options volume.[5][6]

Background of the Combined Entity

NASDAQ, Inc., formerly NASDAQ OMX Group, was created when the Nasdaq Stock Market acquired the Nordic exchanges' OMX Nordic Exchange marketplace on Feb. 27, 2008.[7] Nasdaq removed OMX from its branding almost seven years after the acquisition of the Nordic exchange group.

As part of the transaction, NASDAQ OMX Group also became a 33.33 percent shareholder in DIFX, Dubai's international financial exchange. Borse Dubai is a 19.9 percent shareholder of NASDAQ OMX Group.

Before the merger with OMX, the Nasdaq Stock Market (NASDAQ) listed itself as the world's second-largest cash equities platform by trading volume and the biggest electronic screen-based equity securities market in the U.S. in terms of listings and traded share volume.[8]

With more than 3,500 listed companies, Nasdaq represents more than $9.1 trillion in overall market value.[9] NASDAQ is the primary market for trading NASDAQ-listed stocks.

NASDAQ trades on the Nasdaq Global Select Market under the symbol "NDAQ."

History

NASDAQ began when the National Association of Securities Dealers, or NASD, wanted to create a way for investors to buy and sell stocks on a computerized, transparent, and fast system. The NASDAQ Stock Market debuted in 1971 as the world’s first electronic stock market. Restricted shares of NASDAQ were initially sold by the NASD in 2000 through a private placement offering. Trading restrictions expired in 2002 and shares began trading on the OTC Bulletin Board under the symbol NDAQ. On Feb. 9, 2005, NASDAQ listed its shares on The Nasdaq Stock Market following an offering of secondary shares priced at $9 per share.

Nasdaq was traditionally known as the home of technology and growth stocks, such as Dell, Cisco and Apple, but has expanded into a wide variety of sectors.[10]

Nasdaq made two failed attempts to acquire the London Stock Exchange. The second hostile bid was rejected by the LSE's shareholders in 2006, and LSE executives spurned further discussions with Nasdaq executives. The offer expired on February 10, 2007.[11]

While remaining the LSE's largest shareholder, Nasdaq then embarked in what became a three-way takeover battle for OMX, which saw it lined up against Borse Dubai and the Qatar Investment Authority (QIA). Borse Dubai and the U.S. exchange subsequently teamed up with a joint offer, while the QIA bowed out in December 2007, selling its shares in OMX to Borse Dubai in February 2008.

The deal saw Borse Dubai acquire OMX and then transfer it to Nasdaq in return for a 19.9-percent stake in a new combined company as well as Nasdaq's 28-percent stake in LSE.[12]

In December 2010, Nasdaq OMX Group Inc. announced plans to move into the U.S. carbon markets.

On April 1, 2011, NASDAQ OMX Group and Intercontinental Exchange (ICE) proposed a transaction to acquire NYSE Euronext for $42.50 per share, a 19-percent premium over the offer from Deutsche Boerse.[13] The proposal would have created an international exchange, headquartered in New York City, with a geographic footprint in 16 countries.[14] However, NASDAQ OMX and ICE withdrew their bid for NYSE Euronext on May 16, 2011, after the U.S. Department of Justice threatened a lawsuit over antitrust concerns.[15]

In 2013, NASDAQ OMX Group acquired Thomson Reuters’ investor relations, public relations and Multimedia Solutions businesses.[16]

On May 29, 2013 the SEC announced a $10 million fine against NASDAQ OMX regarding the problematic Facebook IPO on May 18, 2012, in which the SEC cited “poor systems and decision making” both before and after the Facebook initial public offering. When trading began at 11 a.m. on May 18, the Nasdaq system was overwhelmed by 496,000 orders that sent Nasdaq’s computers into a continuous loop that made it impossible to establish a correct opening price for Facebook stock. In addition to the $10 million fine, Nasdaq had already agreed to pay $62 million to the brokers who lost money because of the problems.[17]

In April 2015, Nasdaq OMX agreed to pay $26.5 million to settle a class-action lawsuit over the Facebook IPO. The suit said Nasdaq broke the law in failing to disclose technology weaknesses in its IPO systems and failing to properly design and test them for the Facebook offering. It was the first time a court had sustained a class action suit against a stock exchange.[18]

In January 2014 Nasdaq said it no longer wanted to run the securities information processor, or SIP, the marketwide quote service that broke down and froze thousands of its U.S. stocks on August 22, 2013. [19] However, Nasdaq later reconsidered and made a bid for the contract in 2014, becoming one of two finalists to run the SIP, the other being Tradeworx Inc.’s Thesys Technologies LLC. [20] In November 2014 Nasdaq beat out Thesys and won the right to keep running the SIP, with a mandate to create a subsidiary to manage it.[21]

In March 2014, Nasdaq OMX agreed to sell its trading systems to the Dhaka Stock Exchange, the Bangladesh bourse. The deal brought to 18 the number of exchanges in Asia that use Nasdaq’s technology. [22]

Key People

Products

Nasdaq offers three U.S. equities markets to meet different trading needs, all of which use INET technology. The Nasdaq Stock Market (Nasdaq) is the largest U.S. equities exchange venue by volume. [23]

Nasdaq Nordic is composed of the exchanges in Denmark, Finland, Iceland and Sweden. Together these exchanges are the home of approximately 720 listed companies.

First North is Nasdaq's European market for smaller, growing companies. It operates in parallel to the main market but with requirements especially suited for growth companies.

Nasdaq Baltic Market is a cross-national Baltic securities market composed of Estonian, Latvian and Lithuanian Stock Exchanges and Centrals Securities Depositories (CSDs).

Nasdaq also owns and operates the only stock exchange and central depository in Armenia, covering trading in equities, fixed income, foreign exchange, repo and credit resources.

Nasdaq Commodities offerings have included trading in the Nordic Energy Markets for more than 20 years. They now include German, Nordic and UK power as well as the trading and clearing of freight and seafood.

Nasdaq's NLX market participants can trade a suite of UK and European listed interest rate derivatives products across the yield curve.

Nasdaq also offers options and futures contracts.

Nasdaq re-launched its smallest exchange, NASDAQ OMX PSX (PSX) in April 2013 in an effort to create the leading marketplace for Exchange Traded Products (ETPs). The exchange uses a price-time model and offers market making programs and features designed to provide liquidity to institutional and retail investors. [24]

In December of 2012, the NASDAQ OMX Group announced the launch of SMARTS Broker market surveillance system for commodities trading on the London Metals Exchange. The launch includes the go-live of two global broker-dealer customers, including the global multi-asset brokerage Newedge. The surveillance system gives brokers the ability to monitor, identify and flag trading activity across the three LME trading venues - Select, Phone and Ring. [25]

Nasdaq OMX took a 5 percent equity stake in Borsa Istanbul A.S. in 2013 as part of a deal that also included technology-sharing and advisory services. [26]

Nasdaq had planned to launch a platform for foreign exchange trading in 2016 which it said would make the $5 trillion-a-day global market more transparent and would diversify its own business [27] but it put those plans on hold in January 2016 because of insufficient customer demand.[28]

Contract Volume

Year Total Annual Volume Percent Change
2015 1,045,646,992 (-)8.9%
2014 1,127,130,071 (-)1.4%
2013 1,142,955,206 2.5%
2012 1,115,529,138 (-)13.9%
2011 1,295,641,151 17.8%
2010 1,099,437,223 34.8%
2009 815,545,867 --

2015

Exchange Volume Percent Change
Nasdaq OMX PHLX 623,514,666 0.9%
Nasdaq Options Market 286,845,485 (-)25.7%
Nasdaq OMX Nordic 99,990,848 8.9%
Nasdaq OMX Boston 31,496,313 (-)0.3%
Nasdaq OMX Commodities 3,013,983 76.4%
Nasdaq NLX 785,697 (-)95.7%
Nasdaq OMX 1,045,646,992 (-)8.9%

Hours

NASDAQ Stock Market Trading Sessions (Eastern Time):

  • Pre-market trading hours from 7 a.m. to 9:30 a.m.
  • Market hours from 9:30 a.m. to 4 p.m.
  • After-market hours from 4 p.m. to 8 p.m.

NASDAQ Company Finder

NASDAQ's Company Finder allows investors to search for any NASDAQ-listed company using name, symbol, state and zip code. Investors can also sort the information by company name, issue symbol, or total market value. A legend explaining the results screen is accessible from each page.[29]

Clearing

NASDAQ OMX operates its own clearinghouses and provides clearing and other post-trade technology to marketplaces around the world.

NASDAQ OMX Clearing offers clearing of the following asset classes:

  • Equity and index derivatives on the Nordic and Baltic markets
  • Fixed income derivatives on the Nordic markets
  • Commodity derivatives on Nordic power, emission rights, gas, German and Dutch power as well as physical contracts for the British electricity market and derivatives on these.
  • OTC trades done outside the regulated markets and reported to the clearinghouse for clearing.[30]

In March 2014, Nasdaq OMX became the first market infrastructure owner to receive approval for its clearing house to operate under stricter new European regulations designed to tighten oversight of derivatives markets. The new regulations are part of a move to mandatory clearing of derivatives trades in Europe, which is set to go into effect in 2014. The approval came from the Swedish Financial Services Authority, after the European college of regulators overseeing the application gave its assent the previous week. [31]

Acquisitions and Agreements

  • On Feb. 27, 2008, The Nasdaq Stock Market, Inc. (Nasdaq:NDAQ) (NASDAQ(r)) completed its combination with OMX AB, creating The NASDAQ OMX Group, Inc. (NASDAQ OMX Group).
  • On Oct. 21, 2008, Nasdaq OMX acquired the consulting and clearing units and international derivatives products of Nord Pool of Oslo for about 2.3 billion Norwegian kroner ($412 million).
  • On Dec. 16, 2008, Agora-X, LLC announced that NASDAQ OMX Group, Inc. completed its equity investment following the launch of the new Agora-X electronic communications network for institutional trading in over-the-counter (OTC) commodity contracts. The transaction gave NASDAQ OMX a 20 percent equity interest in Agora-X.[34]
  • On Jan. 11, 2010, the company announced it would offer $700 million of notes and was getting $1.25 billion in new credit, both of which it would use to fully repay its current credit facilities. As a result, Standard & Poor's upgraded the exchange's rating, lifting it one notch from the final rung before junk status.
  • On Dec. 13, 2010, NASDAQ OMX Group agreed to acquire Stockholm-based Zoomvision Mamato, a company that provided live webcasting primarily for investor relations professionals. They would become part of NASDAQ OMX's Global Corporate Solutions division.[36]
  • On Dec. 15, 2010, NASDAQ OMX Group announced an agreement to acquire FTEN, a company that provided real-time risk management solutions.[37]
  • On February 8, 2012, NASDAQ OMX launched a spot gold futures contract in partnership with Ikon Global Markets, a futures commission merchant registered with the CFTC. The contract would be cash-settled, traded under the symbol 'NAU', and sought to simulate the over-the-counter (OTC) spot gold market trading experience.[38]
  • On March 6, 2012, NASDAQ OMX announced NASDAQ OMX Nordic's creation of the Genium INET all-asset and cross-market technology platform. All asset classes from all eight markets in Sweden, Finland, Denmark, Norway, Iceland, Lithuania, Latvia and Estonia were available on this platform.[39]
  • NASDAQ OMX Group launched an interest rate derivatives trading platform called NASDAQ OMX NLX in London on May 31, 2013. The launch began with six products including the German bund and Euribor, in direct competition with the two biggest exchanges in the region.[40]
  • On July 1, 2013, the company acquired the electronic Treasuries trading platform eSpeed from BGC Partners Inc. The purchase consideration included $750 million in cash and as much as $484 million in stock, to be dispersed over 15 years. [41] The deal gave Nasdaq more exposure to the fixed income markets, allowing the exchange to continue its strategy of expanding into a wide variety of asset classes. [42] [43] The platform — which trades two-, three-, five-, seven-, ten- and 30-year instruments — became part of Nasdaq OMX's Transaction Services business.[44]
  • On March 4, 2014, Trading Technologies announced a connection with NASDAQ OMX eSpeed.[45] Early in December of 2013, TT launched connections to the NASDAQ OMX Nordic market and NASDAQ OMX NLX.[46]
  • In January of 2015 Nasdaq acquired Dorsey Wright, a US index provider and analytics group, bringing it further into the market for indexing and exchange-traded funds.[47]
  • On June 9, 2015 Nasdaq and Trading Technologies International, Inc. (TT) announced that TT would connect the exchange's German power and Nordic benchmark power market contracts, among other European operations, through a new platform with mobile capabilities. [48]
  • In October of 2015, Nasdaq agreed to buy SecondMarket Solutions to combine forces with the NASDAQ Private Market. The acquisition of SecondMarket, an early pioneer in the private secondary market, will facilitate the exchange of shares for private companies, including DocuSign, Pinterest, Shazam and Tango. The expanded NASDAQ Private Market business will be headquartered in San Francisco and New York and headed by Bill Siegel, CEO of SecondMarket. It will work with institutional investors to help them gain access to shares of pre-IPO startups, for which there is increasing demand.[49]
  • In December of 2015, Nasdaq announced that it would acquire Chi-X Canada from Chi-X Global in a deal expected to close in the first quarter of 2016. The deal will expand Nasdaq's North American equities trading business beyond the U.S.
  • On March 9, 2016, Nasdaq announced it would acquire the International Securities Exchange for $1.1 billion in a deal closed on June 30, 2016.[50][51]

Structure and Business Model

OMX has three business units. Nordic Marketplaces includes exchanges in Stockholm, Helsinki, Copenhagen and Iceland, as well as the First North alternative market launched in 2006, and accounted for 48 percent of group revenues in that year.

The equities platform ranks as the fifth-largest in Europe, while the derivatives platform traded 137 million contracts in 2006.

The Market Technology division contributed 35 percent of sales in 2006, providing trading and settlement platforms to customers including X and Y. The Information Services and New Markets division provided 17 percent of revenues.

References

  1. About Us. Nasdaq OMX.
  2. What is NASDAQ?. NASDAQ OMX Group.
  3. Top 10 stock exchanges by market cap. Worldstockexchanges.net.
  4. 2015 Annual Survey: Global Derivatives Volume. Futures Industry.com.
  5. OCC Monthly Volume Report. OCC.
  6. Deutsche Borse Completes Sale of ISE to Nasdaq. Finance Magnates.
  7. NASDAQ Completes OMX Transaction to Become The NASDAQ OMX Group, Inc.. Nasdaq.
  8. Analysts' Presentation. NYSE Euronext.
  9. Nasdaq Corporate Overview. Nasdaq.
  10. How Stock Markets Work. Forbes.
  11. Nasdaq fails in takeover bid for London Stock Exchange. The New York Times.
  12. Qatar bows out of OMX battle. Financial Times.
  13. NASDAQ OMX & ICE Joint Proposal for NYSE Euronext. NASDAQ OMX Group.
  14. NASDAQ OMX Group and Intercontinental Exchange Propose Superior Transaction to Acquire NYSE Euronext for $42.50 Per Share, 19% Premium to Deutsche Boerse Proposal. Nasdaq.
  15. Nasdaq Drops $11.3 Billion Bid for NYSE, Clearing Way for Deutsche Boerse. Bloomberg.
  16. The Nasdaq Story. Nasdaq.
  17. Nasdaq Is Fined $10 Million Over Mishandled Facebook Public Offering. NY Times.
  18. Nasdaq to settle Facebook IPO lawsuit for $26.5 million. Reuters.
  19. Nasdaq Said to Plan End to Role Running Stock Price System. Bloomberg.
  20. High-Frequency Firm Said to Be Finalist to Run Nasdaq Price Feed. Bloomberg.
  21. Nasdaq Wins Committee Vote for Right to Run Stock Feed. Bloomberg.
  22. Nasdaq OMX builds up technology sales in Asia. Financial Times.
  23. The Nasdaq Stock Market. Nasdaq.
  24. NASDAQ OMX to Launch Marketplace Designed for Exchange Traded Products. NASDAQ OMC.
  25. NASDAQ OMX Launches SMARTS Broker for Trade Monitoring on the London Metal Exchange With Newedge. Nasdaq OMX press release.
  26. Nasdaq To Take 5% Equity Stake in Borsa Istanbul. The Wall Street Journal.
  27. Nasdaq poised to launch FX trading platform: top executive. Reuters.
  28. Nasdaq Suspends Currency-Trading Plans While Rivals Race Ahead. Bloomberg.
  29. NASDAQ Company Finder. NASDAQ.
  30. Clearinghouses and CSDs. Nasdaq OMX.
  31. Nasdaq OMX gets go ahead for clearing house under new rules. The Financial Times.
  32. Nasdaq to Buy Boston Stock Exchange for $61 Million. Bloomberg.
  33. Nasdaq OMX Buys Stake in Fortis EMCF. Finextra.
  34. NASDAQ OMX Completes Equity Investment in Agora-X, LLC. NASDAQ OMX.
  35. NASDAQ OMX Rebrands Philadelphia Board of Trade to NASDAQ OMX Futures Exchange. NASDAQ OMX.
  36. NASDAQ OMX to Acquire Zoomvision Mamato. NASDAQ.
  37. NASDAQ OMX to Acquire FTEN. NASDAQ website.
  38. NASDAQ OMX and IKON GLOBAL MARKETS Launch Spot Gold Futures. FinazNachrichten.
  39. NASDAQ OMX Nordic Creates All-Asset and Cross-Market Technology Platform. NASDAQ OMX.
  40. Nasdaq UK Derivative Market to Offer German Bund, Euribor. Bloomberg.
  41. Nasdaq OMX in $1.2bn deal to buy eSpeed. Financial Times.
  42. Nasdaq OMX Completed Acquisition of eSpeed Platform for Trading of Benchmark U.S. Treasuries. NASDAQ OMX Press Release.
  43. Nasdaq to buy eSpeed platform for $750 million. Reuters.
  44. Nasdaq accelerates diversification play with eSpeed buy. The Trade USA.
  45. NASDAQ OMX eSpeed Goes Live on Trading Technologies. The Wall Street Journal.
  46. TT Goes Live on NLX and Nasdaq OMX Nordic. Waters Technology.
  47. Nasdaq buys US index provider for $225m. The Financial Times.
  48. Trading Technologies Will Connect to Nasdaq's European Commodities Market. Trading Technologies.
  49. NASDAQ Acquires SecondMarket To Help Startups Sell Shares. TechCrunch.
  50. Nasdaq to Buy Options Exchange Operator ISE for $1.1 Billion. Dow Jones Newswire.
  51. “Cannot be done”: ISE’s Gary Katz Tells The Inside Story Of The Biggest Disruptor To The Options Industry. John Lothian News.