Nasdaq goes European
This week US stock exchange Nasdaq announced it would acquire Scandinavian stock exchange operator OMX in a $3.7 billion deal. OMX is the fifth-largest stock exchange in Europe.
The deal is part of a tidal wave of consolidation in international exchanges and efforts to consolidate. Nasdaq itself attempted over the past year to buy the London Stock Exchange (LSE), Europe's #1 stock market. The company still owns 30% of the LSE, but appears to be frustrated in its attempt to win majority control.
The idea of borderless electronic securities exchanges is pushing out the concept of narrowly national ones. Already OMX combines the stock exchanges of Sweden, Denmark, and Iceland, as well Finland, Estonia, and Latvia. (In 2003, it acquired HEX, owner of the latter three exchanges.)
OMX is also a technology company, and Nasdaq will have ownership of its cutting-edge trading technology, used in other stock exchanges around the world. So beyond a stock exchange serving Northern Europe, Nasdaq will have close links with other bourses worldwide. The technology is lowering the cost of stock trading in Europe, and that, combed with the high-flying euro, is making the European exchanges all the ore valuable.
Earlier in the year, New York Stock Exchange acquired Euronext (Europe's #2 stock exchange) and Deutsche Borse and the Swiss exchange jointly acquired the US-based International Securities Exchange (ISE), a leading dealer in options.
The staid old world of stock trading is undergoing radical change as IT advances and new permissive trade and currency policies are making costs (and prices) go down even as the ability to extend internationally grows. That's especially due to pressure from the biggest investors who demand cut-rate and flexible services.
Nasdaq is expanding in other ways. It is going into trading options for the first time, a move that will be helped by the OMX deal. It also is trying to buy the Philadelphia Stock Exchange, which specializes in options.
As we've written before, as comapnie sgo multinational they need multinational lsistings. And only the big can servce the big.
