Nasdaq thinks globally, buys regionally

Marketplace Staff Oct 2, 2007


Scott Jagow: Wall Street isn’t the only place stocks are traded in this country. There are regional exchanges too. One of the oldest ones is the Boston Stock Exchange. It started doing business in 1834.

This morning, Nasdaq announced that it’s buying the Boston Exchange. For the Nasdaq, I don’t think this has much to do with nostalgia, though. More now from Amy Scott.

Amy Scott: Nasdaq has had a busy few weeks. Last month, the company bought a portion of a Swedish Stock Exchange, sold a piece of itself to the Dubai Bourse all the while holding onto a stake in the London Stock Exchange.

So now, why Boston?

Analyst Adam Sussman with TABB Group sees the deal as a pre-emptive strike. Nasdaq has been fending off competition from an electronic upstart called BATS. It’s not an official exchange, but wants to become one.

Sussman says one shortcut would be to buy an existing stock exchange, like Boston.

Adam Sussman: By Nasdaq buying the Boston Stock Exchange, they’ve kind of closed the opportunity for BATS or someone like BATS to step in and kind of circumvent the normal exchange registration process.

The deal would also give Nasdaq a clearing license. Clearing is the transfer of securities between buyer and seller. Right now, one major corporation dominates the business.

In New York, I’m Amy Scott for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.