News, analysis and personal reflections on the markets & the financial sector
Showing posts with label Nasdaq. Show all posts
Showing posts with label Nasdaq. Show all posts

Thursday, March 10, 2016

Nasdaq to Buy Options Exchange Operator ISE for $1.1 Billion

  • Just as the London Stock Exchange and Deutsche Börse Group are in a tango over a potential merger, Deutsche Börse officials take a side step and agree to sell International Securities Exchange Holdings, Inc. (ISE) to Nasdaq for a total cash consideration of $1.1 billion
  • ISE’s exchanges serve as the venues for more than 15% of trading in U.S. options

Nasdaq Inc. agreed to buy options-exchange operator International Securities Exchange for $1.1 billion, in a deal that gives it control of nearly 40% of the U.S. options market.

Nasdaq, which is buying ISE from Deutsche Börse Group, expects to complete the deal in the second half of 2016 and fund it with a mix of debt and cash on hand.

ISE operates three electronic options exchanges—ISE, ISE Gemini and ISE Mercury—which serve as the venues for more than 15% of trading in U.S. options. Nasdaq operates Nasdaq PHLX, Nasdaq Options Market and Nasdaq BX Options.

As part of the transaction, Nasdaq will gain an additional 20% stake in the Options Clearing Corp., for a total position of 40% in the world’s largest equity derivatives clearing corporation.

Options trading has grown more competitive in recent years. Last year, BATS Global Markets Inc. launched EDGX options, and MIAX Options Exchange struck an equity rights deal with several major firms, predicting the move would triple its market share.

The London Stock Exchange has said it is in advanced talks with Deutsche Börse about a so-called merger of equals that would value the combined company at about $28 billion. Intercontinental Exchange Inc. and CME Group Inc. are also considering bids for the LSE.

For its part, Nasdaq has transformed from a U.S.-focused exchange operator to a global business that includes markets in the U.S., Canada and the Nordic region, as well as a suite of businesses that include investor and public relations, technology and data.

Friday, August 23, 2013

Pricing problem shuts down trades on Nasdaq for 3 hours

NEW YORK — The Nasdaq Stock Market suffered a distressing three-hour outage that halted trading in some of the nation's leading companies, the latest in a series of embarrassing glitches that have exposed technological weaknesses across Wall Street.

The snafu sent harried traders scrambling for alternative ways to conduct business and left legions of individual investors with no way to buy or sell shares of companies such as Apple Inc. and Google Inc.

The country's second-largest stock market was disabled from 9:14 a.m. to 12:25 p.m. Pacific time. Nasdaq blamed a faulty data link that disseminates stock quotes among exchanges. It said the problem was corrected.

Trading resumed in the final 35 minutes of the day. Nasdaq ended up gaining 1.1%, though shares of its parent company, Nasdaq OMX Group Inc., slumped 3.4%.



Wall Street has long worked to project an image of technological sophistication, and rapid-fire computerized trading now dominates Wall Street.

But electronic breakdowns have become more common, and the lengthy time to correct the Nasdaq outage exposed what experts said was increasing digital complexity that has made the financial markets more fragile.

The shutdown recalled the marred initial public offering of Facebook Inc. last year and the May 2010 "flash crash" in which the Dow Jones industrial average sank nearly 1,000 points in minutes. Just this week, Goldman Sachs suffered a bout of botched options trading that forced the cancellation of thousands of orders.

"It's just another black eye for Wall Street," said Alan Valdes, a floor trader at the rival New York Stock Exchange. "It erodes confidence at a time when we don't really need it. The market was getting a little footing here; you don't need this."

The big risk, experts said, is that a snafu could lead to significant losses for investors, especially if it struck on a busy day in a down market.

Aside from the challenge of pinpointing the cause of a problem, stock exchanges must walk back in time to reverse or repair millions of stranded stock orders. That's a laborious process filled with guesswork that often leaves investors feeling shortchanged.

Luckily for Nasdaq, Thursday's outage struck on a slow summer day when there was little economic news and much of Wall Street was on summer vacation. No estimate was available for possible losses.

In May, Nasdaq was fined $10 million, the highest penalty ever paid by an exchange, for fumbling last year's highly anticipated IPO of social networking giant Facebook Inc. The Securities and Exchange Commission later said Nasdaq's system had a design flaw that failed to match buy and sell orders.

In March 2012, electronic exchange operator Bats Global Markets Inc. canceled its IPO because of a software bug in its own system. Bats, which stands for Better Alternative Trading System, had billed itself as a superior alternative to conventional stock exchanges.

Two years earlier, the harrowing flash crash saw the Dow plunged nearly 1,000 points before rebounding in the same afternoon.

Federal investigators later pinned the blame on high-frequency traders, who use supercharged computer programs to make big wagers on stocks. The SEC also singled out one investment firm, which had made a $4.1-billion trade using a computerized algorithm.

Nasdaq trading has twice been interrupted by squirrels. In 1987, a squirrel caused a power failure in Connecticut that shut down Nasdaq for about 90 minutes. In 1994, another squirrel nibbled through a power line at an electric company, causing a 30-minute shutdown.

Some traders said the SEC bore some responsibility for electronic breakdowns. It has allowed a crop of alternative trading venues to emerge, which they said has resulted in a sprawling and fragmented market.

"There's a downside to having a thousand flowers bloom," said Arnuk, who co-wrote "Broken Markets," a book calling for Wall Street reform. "The market becomes complex and it becomes very, very hard to manage."

Friday, April 1, 2011

Nasdaq, ICE Top Deutsche Boerse With $11.3 Billion NYSE Bid

Nasdaq OMX Group Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE) made a hostile bid of about $11.3 billion for NYSE Euronext, trying to snatch the owner of the New York Stock Exchange away from Deutsche Boerse AG.  As part of the deal, ICE would purchase NYSE Euronext's Liffe futures markets, while Nasdaq OMX would take over its U.S. options markets. The offer represents a 19% premium over a February bid for NYSE Euronext by the German exchange.

Nasdaq OMX and ICE offered $42.50 in cash and stock for each NYSE Euronext share, according to a statement released today. The shares closed at $35.17 yesterday. Deutsche Boerse’s February all-stock agreement to purchase NYSE Euronext values the company at about $35.04 a share.

The union of NYSE Euronext and Nasdaq OMX would join the two largest U.S. exchange operators, giving the combined entity a monopoly for company stock listings in the world’s largest capital market. As part of the deal, ICE would purchase NYSE Euronext’s futures markets, while Nasdaq OMX would keep its U.S. options markets. The Deutsche Boerse deal, valued at $9.53 billion when announced in February, creates the world’s largest exchange operator with venues in the U.S. and Europe.

“The $42.50 sounds great on paper,” said Sachin Shah, a special situations and merger arbitrage strategist at Capstone Global in New York. “But on a practicality level, as Nasdaq and ICE shares trade today and the next few days, as we’ve seen over the past month or two now of how Deutsche Boerse shares have traded, that will determine if the implied value is $42.50 or much lower.”

Sweden, Denmark, Finland

Nasdaq OMX owns 12 equity and options markets in the U.S. and Europe including the Nasdaq Stock Market, Nasdaq Options Market and venues in Sweden, Denmark, Finland, Iceland, Estonia, Latvia and Lithuania. It produced net income of $395 million in 2010, which is 26 percent of the company’s $1.5 billion in net revenue for the year.

NYSE Euronext’s divisions include the New York Stock Exchange, the Euronext platform that handles shares in the Netherlands, Belgium, Portugal and France, and the European derivatives platform known as NYSE Liffe. Income amounted to 22 percent of its $2.5 billion in net revenue.

The Deutsche Boerse deal, valued at $9.26 billion as of yesterday, creates the world’s largest exchange operator. It carries a 250 million ($356 million) breakup fee, increasing the cost of Nasdaq OMX and ICE’s bid by about $1.35 a share, said Sachin Shah, a special situations and merger arbitrage strategist at Capstone Global in New York.

Half of Trading

Combined, NYSE Euronext and Nasdaq OMX would have about 48 percent of U.S. equity trading. They have struggled to keep market share since Kansas City, Missouri-based Bats Global Markets and Jersey City, New Jersey-based Direct Edge Holdings LLC started their own venues about five years ago. NYSE Euronext currently handles 28 percent of equity volume and Nasdaq OMX has 20 percent, according to data from London-based Barclays Plc for the fourth quarter.

Thursday, July 29, 2010

NASDAQ OMX to Acquire Market Surveillance System Provider SMARTS

The NASDAQ OMX Group has signed an agreement to acquire SMARTS Group, the technology provider of market surveillance solutions to exchanges, regulators and brokers.

This acquisition is part of NASDAQ OMX's strategy to diversify its commercial technology business and enter the broker surveillance and compliance market, Nasdaq said in a release.

SMARTS will be part of the NASDAQ OMX Market Technology business, which delivers technology to over 70 marketplaces in more than 50 countries.

Under the agreement NASDAQ OMX will acquire 100 percent of the shares in privately held SMARTS Group Holdings. The transaction is expected to be concluded within Q3 2010. Financial terms of the transaction were not disclosed. Marlin & Associates acted as exclusive financial and strategic advisor to SMARTS.

Australia-based SMARTS has set the benchmark for surveillance systems, with the most proven and widely adopted surveillance solutions in the world.

Anna Ewing, CIO of NASDAQ OMX, said: "The acquisition of SMARTS is a strategic fit with NASDAQ OMX's commercial technology business. Efficient surveillance operations are imperative to ensure integrity in today's financial markets, and SMARTS allows us to capitalize on the growing demand for surveillance technology products in exchange, regulator and broker markets worldwide. We are also excited about expanding our presence in Australia and look forward to leveraging SMARTS' center of excellence and innovation in the region."

Dr. Andreas Furche, CEO of SMARTS Group Holdings, said: "We are proud to have been chosen by NASDAQ OMX. This acquisition is recognition of the strength of our solutions, Australian innovation and the talent and professionalism of the SMARTS team.

Being part of NASDAQ OMX provides enormous growth opportunities for SMARTS surveillance technologies and provides us with the direct connection to the U.S. markets that we have been seeking. Moreover, the SMARTS customer base will benefit from the added confidence of working with a world-leading company that has a similar customer base and therefore understands the business and requirements of SMARTS' customers."

Thursday, October 15, 2009

Nasdaq OMX to roll out third equity exchange in 2010

Nasdaq OMX Group plans to use an exchange license it acquired when it bought the Philadelphia Stock Exchange in 2007 to launch a third equity-trading platform. Eric Noll, executive vice president at Nasdaq OMX, said the exchange is meant to give investors "additional choices that will help supplement their various trading strategies." Pending approval from the Securities and Exchange Commission, the exchange is scheduled to launch in the second half of next year.


The company is working to diversify as upstarts BATS Exchange and Direct Edge now claim more than one-fifth of U.S. stock trading activity, chipping away at a business long dominated by Nasdaq OMX and NYSE Euronext (NYX).
Nasdaq OMX said the new platform will feature a price/size priority model that will allow customers to execute orders through any of Nasdaq's platforms, as opposed to the price/time priority model offered on the Nasdaq Stock Market and Nasdaq OMX BX.
This model will incentivize traders to display larger order size, which appeals to institutions, high-frequency traders and retail investors alike, according to Brian Hyndman, head of transaction services for Nasdaq OMX.
more at

Thursday, August 13, 2009

NYSE gains momentum in IPO battle with Nasdaq

This year, the New York Stock Exchange has snagged 11 of the 15 initial public offering listings, while Nasdaq has stumbled, according to data from Thomson Reuters. Nasdaq had more than 90% of IPO listings in 1999 and 2000 and a 67% market share as recently as 2007. Analysts suggest the shift in market share may be a result of efforts on the part of NYSE Euronext to establish new benchmarks for listings.

more at

Friday, August 7, 2009

Price war takes toll on Nasdaq's profit, market share

Nasdaq OMX posted a 31% drop in profit for the second quarter and said its share of equity trading in the U.S. declined by a third. The results were partially because of a price war with BATS Exchange, Direct Edge and other rivals. The trans-Atlantic exchange reported $69 million in quarterly profit compared with $100 million during the same period last year.

more at

Wednesday, June 10, 2009

All Nasdaq-listed companies to get research coverage

Nasdaq OMX and Morningstar, an independent research company, entered an agreement that will give the exchange at least some research coverage on all of its listed companies. Hundreds of companies do not receive analyst coverage. "Investors need to be able to access insightful and trusted data and research to make investing decisions," said Bruce Aust, executive vice president of Nasdaq. "Together, Nasdaq OMX and Morningstar are filling a void that has existed for some time, particularly among small- to midcap companies."

more at