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Nasdaq in deal with Dubai exchange

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KAI RYSSDAL: We learned this morning the NASDAQ and the Dubai stock exchange have come to terms on an intricate deal to buy the Nordic OMX Exchange group. We’ve got Marketplace’s Stephen Beard’s on the line from London to explain. Hello Stephen… First question, it seems to me, is: OMX what? Why all this interest in these Nordic exchanges?

STEPHEN BEARD: Indeed. It is fairly small. It is a profitable, well-run exchange group, and it takes in exchanges in Sweden, in Denmark, in Finland, and in the Baltic states — Latvia, Lithuania and Estonia. But compared with NASDAQ and the NYSE and the London Stock Exchange, it is pretty small. It’s all part of this global rush by stock exchanges to merge and form alliances across borders. The ultimate goal, of course, being global share dealing.

RYSSDAL: This is, though, more complicated than most — there’s stock swaps and all sorts of things going on. Lay out for us who gets what at the end of the day.

BEARD: Yes, it is as you say very complicated. OK, here we go… Here are the bare bones of it: NASDAQ gets OMX. In return for selling its shares in OMX, Dubai Bourse gets a 20 percent stake in NASDAQ, and it gets to buy the bulk of NASDAQ’s 31 percent stake in the London Stock Exchange. Also, NASDAQ gets a strategic stake in the Dubai Bourse. So what we wind up with here is NASDAQ having a big presence in Nordic countries, and through Bourse Dubai, a stake in what is developing into a major financial center in the Middle East.

RYSSDAL: The president spoke about this deal this morning — he said there’s going to be a national security review of Dubai and its stake in the NASDAQ. Do you think that’s going to turn out to be a big deal? Do you remember Dubai Ports World?

BEARD: Absolutely — this is clearly going to touch a raw nerve. It’s worth noting that under this deal, Bourse Dubai would only gain a 5 percent of the voting rights within NASDAQ. It’s interesting too, you know Kai, to contrast this with the British reaction — what we have here today is Dubai Bourse, under this deal, will get a 28 percent stake in the London Stock Exchange. And there hasn’t been the slightest peep of protest or expression of any concern here.

RYSSDAL: Let me ask you a standard investing question… You know, the thing you want to do obviously is buy low, sell high. With this focus on global markets and global exchanges, do you think people are getting a good deal in this arrangement that was announced today?

BEARD: There are those who argue that for NASDAQ, this is not so much a great deal as a fig leaf. It tried and failed to buy the London Stock Exchange, which is Europe’s biggest exchange, which would have been a real prize. And now, really, it’s got to come home with something to show for its efforts — it’s got to come home with something that makes it look like more of a global player. And this deal will do that. But if we compare it, for example, the NYSE’s purchase of EuroNext, which includes Paris, Amsterdam and the big futures market in London, this is pretty small beer.

RYSSDAL: Small beer… Stephen Beard in London for us. Thank you Stephen.


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