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Nasdaq Aims to Dominate U.S. Stock Market

Posted on: Thursday, 26 June 2003, 06:00 CDT

By AMY BALDWIN

NEW YORK (AP) -- The Nasdaq's new CEO unveiled his strategy for the market's future Thursday, saying there will be a "maniacal focus" on being the superior U.S. stock market. Already there are casualties abroad, with Nasdaq announcing it was closing its Nasdaq Europe operation.

Nasdaq also is expected to forgo the initial public offering that was one of its biggest goals during the bull market.

"We are not going to be involved in things that are not core to our mission. That is the big news today. ... We're about becoming the dominant U.S. market," said Bob Greifeld, who took over the leadership of the electronic market last month.

After spending the first six weeks on the job reviewing Nasdaq's operations and products, here and abroad, Greifeld said at a news conference he had decided to discontinue some ventures.

"When you define your mission it is important to decide what you are not going to do. ... What we will do is have a maniacal focus on achieving our core mission," he said.

Nasdaq will concentrate its resources and efforts on landing more initial public offerings, attracting stock listings from other markets and increasing its share of trading volume, said Greifeld, formerly an executive at Sunguard Data Systems, a provider of electronic processing and information technology services.

Since the technology bubble burst three years ago, Nasdaq has endured declining profits and revenues, forfeited trading volume and shelved plans to go public.

The closure of Nasdaq Europe, a market located in Belgium and in which Nasdaq has a majority stake, is expected to be completed by January.

Greifeld announced other retrenchments as well.

Nasdaq will exit a joint venture with the London International Futures Exchange to create a market for single-stock futures.

Nasdaq is also walking away from plans for a U.S. Bulletin Board Exchange for companies not eligible for listing on the Nasdaq SmallCap Market. However, the Over the Counter Bulletin Boards, where Nasdaq's own stock is traded under "NDAQ" will continue to operate.

Greifeld wouldn't comment any potential charges against earnings or cost savings from the moves, which will result in 80 job cuts out of a 1,200-member workforce. That information, he said, would be contained in Nasdaq's upcoming second-quarter earnings statement.

Meanwhile, Nasdaq is continuing to review the operations of its German unit, called Nasdaq Deutschland, and will make a decision of its fate by the end of the year. But Greifeld made it clear that the 24-hour global marketplace that the Nasdaq envisioned during the late '90s bull market is not a priority now.

"My job is to deal with the hear and the now. We don't see (24-hour) global trading being part of the here and the now being part of the here and now in the near term," Greifeld said. "I believe it will be an eventuality, but it isn't something we want to tackle at this time."

One market expert applauded Nasdaq's new, more narrow mission.

"This sends a pretty clear message that Nasdaq is going to streamline its operations, and that is very good. They are getting rid of a lot of the noise," said Rob Hegarty, a securities markets specialist at the Tower Group.

He added: "If you have just been placed in charge of a company that had steadily declining market share, you need to make drastic changes," Hegarty said.

Nasdaq's changes give it a better chance of reclaiming some of the trading volume it has forfeited to rival trading networks, such as Instinet and Archipelago's ArcaEx, Hegarty said.

These competitors, called ECNs - short for electronic communications networks - claim about 45 percent of trades involving Nasdaq stocks, up from 12 percent in 1988, Hegarty said.

Nasdaq responded to the ECN competition by launching a new trading platform, SuperMontage, in November, but so far, it hasn't brought volume back.

Greifeld also said Nasdaq may never have an initial public offering, adding that Nasdaq stock is already traded on the Over the Counter Bulletin Board. He added that a higher-profile offering is not necessary, though the market could decide later to launch a second offering to raise money for operations.

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