UPDATE:Nasdaq OMX Plans To Launch 3rd Equity Trading Platform
October 15 2009 - 11:06AM
Dow Jones News
Nasdaq OMX Group Inc. (NDAQ) is moving forward with plans to
launch a third U.S. equities exchange next year that will
incorporate a new pricing model for stock trades, the company
announced Thursday.
The new platform will use an exchange license acquired via
Nasdaq OMX's 2007 purchase of the Philadelphia Stock Exchange, and
is intended to give investors "additional choices that will help
supplement their various trading strategies," Executive Vice
President Eric Noll said in a statement.
It also gives the transatlantic exchange operator another tool
to regain market share in U.S. cash equities, where smaller
electronic rivals have cut into Nasdaq OMX's business.
The new platform, not yet named, is slated to launch in the
second half of 2010, pending approval from the Securities and
Exchange Commission.
Nasdaq OMX shares fell 19 cents in recent trading to $20.60. The
stock is down 17% this 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.
The announcement of the new Nasdaq OMX platform comes as its
junior BX platform has gained traction in recent months, with the
help of a money-losing price plan that lifted its market share to
2.6% in August.
Business at BX rose further to an estimated 3.2% in September,
even after Nasdaq OMX raised prices.
The new exchange is among a host of new ventures being pursued
by Nasdaq OMX Chief Executive Bob Greifeld as the company works to
diversify.
On Wednesday, Nasdaq OMX announced a new listing market aimed at
smaller companies that don't currently qualify for listing on the
Nasdaq Stock Market or the New York Stock Exchange, which it is
calling BX.
"With BX we are filling a necessary need for a well-regulated
listing venue for companies that otherwise would transfer to, or
remain on an unregulated or lightly regulated platform," said Bob
McCooey, senior vice president of Nasdaq OMX, in a statement.
The move puts Nasdaq OMX up against OTCQX, a platform operated
by Pink Sheets operator Pink OTC Markets Inc. (PINK), and
Toronto-based TMX Group (X.T)'s Venture Exchange.
Both venues aim to serve as a stepping stone toward listing on a
bigger market, and target startup companies alongside those that
have been delisted after falling below standards for market
capitalization or share price.
Companies looking to list on BX will need to meet some listing
requirements, like having three or more independent directors and
an independent audit committee, according to Nasdaq OMX.
BX will leverage a listing license held by the Boston Stock
Exchange, acquired by Nasdaq OMX in September 2008. That platform's
launch also requires SEC approval.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
(Mike Barris contributed to this report.)