Tuesday, October 2, 2007

NASDAQ consolidation Continues... NASDAQ to purchase the Boston Stock Exchange

Founded in 1834, the Boston Stock Exchange (BSE) is the third oldest exchange in the US. Well..not anymore, according to the breaking news release from the BSE.

" BOSTON STOCK EXCHANGE AND ITS KEY ASSETS TO BE ACQUIRED BY NASDAQ" A Boston institution becomes part of nation's largest equities exchange
Included in the sale is the Boston Stock Exchange and its key assests: The BSE's holding company (BSE Group), the Boston Equities Exchange (BeX), Boston Stock Exchange Clearing Corporation (BSECC), and BSE's regulatory authority over the Boston Options Exchange (BOXR). NASDAQ's acquistion of the BSE Group is valued at approximately $61 million.
According to Michael J. Curran, chairman of chief executive officer,
"Though it is a sad moment for the BSE and its 173 year heritage of innovation and service to the US markets, we are not immune to the global consolidation that is occurring in this industry...We believe our sale to NASDAQ is a favorable outcome for our seat holders and we are proud to become part of the NASDAQ Stock Market and its own tradition of innovation and service."
NASDAQ's response via their press release
"NASDAQ is very focused on meeting the needs of its customers. This transaction provides added liquidity, new trading choices and an enhanced competitive market environment. NASDAQ's acquisition of the BSE will expand NASDAQ's execution offerings, and deliver user and investor benefits consistent with our Brut and INET acquisitions...We believe a second exchange license in both equities, and in the future options, will provide market structure flexibility as we continue to deliver on our mission of being the number one trading platform in the transactions business." Bob Greifeld, President and Chief Executive Officer of NASDAQ

"This deal will allow our customers to better execute their trading strategies. From critical trading functionality, to crossing products, and risk management offerings, NASDAQ's second quote in NASDAQ, NYSE and AMEX-listed securities will arm our diverse customer base with more choices and competitive pricing options. Additionally, we are optimistic that the clearing business will provide valuable benefits for both NASDAQ and our customers over time." Chris Concannon, NASDAQ Executive Vice President of Transaction Services
This is amazing. As our financial system is crumbling around US due to the "sub prime" farce, the big players are taking advantage of the system. You'll see..after all the chaos settles, our economic markets will have been completely consolidated.

"For traditional exchanges, there seems to be a bit of a landgrab at the moment -- to both protect and grow liquidity from the onslaught of new and merged competitors," said Cubillas Ding, an analyst at Celent.reuters 10/2
Take for instance, Sept 20th.

In minutes, NASDAQ and the state owned Borse Dubai (created 2 months ago) shocked everybody when they announced they would stop their months long bidding war for OMX. OMX is a Swedish/Finnish financial services company with an amazing highly desired integrated 'back end technology' which consolidates other money market 'exchanges'.
[OMX] in addition to owning and running exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states, provides technology to about 60 exchanges worldwide, including the Australian Securities Exchange, Nordic power market Nordpool and the Singapore Exchange. khaleejtimes
In short, in the unique shares/cash trade. Dubai will acquire OMX..swap it to the NASDAQ..who in turn will repay Dubai with a 19.99 % share in the NASDAQ and NASDAQ's 28% share of the London Stock Exchange(LSE). In the deal NASDAQ will also gain a 33% share of Dubai's rebranded NASDAQ exchange. NASDAQ press release

Sept. 20th became much more complicated when Qatar via the Qatar Investment Authority (QIA) began wildly purchasing OMX shares and released a 'take no action' call to OMX shareholders on the NASDAQ/OMX announcment. Furthering the craziness, the QIA purchased the NASDAQ's remaining shares for sale in the LSE and went ahead and purchased another 20% stake in the LSE.

At the end of the day,
Qatar and Dubai are now the two biggest shareholders of the LSE, holding almost half of the world's third-largest stock exchange.reuters
The exchanges are consolidating, folks. Within weeks NASDAQ has gobbled up the competition and are realigning the exchange markets further intertwining the US, UK, Europe, and the Middle East together...most notably Dubai. Is this what we want?
Such alliances could become a way for corporations to get around some political sensitivities about outright takeovers of key national assets

This kind of exchange in the sense of swapping stakes, this reciprocal cross holding, is possibly a substitute for a straight merger because there would be political difficulties in a straight merger," said international securities expert John Coffee, a Columbia University Law School Professor.reuters

Borse Dubai and Nasdaq are plotting to create a transcontinental trading platform that will include the London Stock Exchange (LSE)

These deals were billed as the beginning of global exchange platform bridging North America, Europe and the Middle East and the inclusion of the LSE in such a structure would be a stunning achievement.UAE Interact
Does one really think that Greenspan would be on a "it's not my fault" tour if he didn't know the system was crumbling?...

Same Players. Different Scandal.

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