NASDAQ FUELS GLOBAL DEAL FRENZY

Global Finance, Jul/Aug 2007 by Green, Paula L

MARKET NEWS

Nasdaq, the world's largest all-electronic exchange, has reentered the global merger frenzy with a $3.7 billion bid for Nordic bourse OMX. Undeterred by the failure of its three bids for the London Stock Exchange (LSE), Nasdaq is optimistic it can push into Europe with its purchase of the Stockholm-based exchange. The deal was approved by the OMX board of directors in early June, although the Dubai International Financial Centre, an investment fund owned by the state of Dubai that operates the stock exchange in the Gulf nation, is reportedly considering a counter bid for OMX.

Founded in 1985 and the world's first publicly listed bourse, OMX is Europe's fifth-largest stock exchange. The deal would give Nasdaq access to about 80% of the Nordic and Baltic securities markets through seven exchanges: the Helsinki, Copenhagen, Stockholm and Iceland exchanges in Scandinavia, and the Tallinn, Riga, and Vilnius exchanges in the Baltics.

The purchase also would give Nasdaq a badly needed transatlantic connection and let it compete with its crosstown rival, the New York Stock Exchange.

Analysts say OMX is a natural fit for Nasdaq since both are technology-driven. It also gives Nasdaq a solid platform to launch another move for the LSE in 2008, when English law lets it make another bid for the British bourse. The venture also hands Nasdaq a needed toehold in Europe to face the looming competition sure to come from Project Turquoise, a secondary trading platform being launched by more than half a dozen leading European investment banks by year's end.

Nasdaq's deal is just the latest of more than $60 billion in joint ventures and acquisitions among global exchanges over the past two years, according to data compiled by Bloomberg.

Far from the bustling streets of New York, African political leaders are hoping to ride the wave of global derivatives-trading growth with the creation of the Pan African Commodities & Derivatives Exchange (Pacdex). The exchange, set to be launched by the end of next year, would be the continent's first regional cross-border commodity and derivatives exchange. Headquartered in Gaborone, Botswana, the new exchange would kick off operations with about 70 employees, says Anthony Adendorff, chief executive officer of the Pan African Commodities Platform, the management company of Pacdex.

Africa has been largely left out of the wild double-digit growth in derivatives trading this decade. The number of futures and options contracts traded on exchanges around the globe soared by nearly 20% in 2006 over 2005, which saw its own 12% growth in volume, according to the Futures Industry Association in Washington, DC. Sophisticated technology now makes it feasible for a pan-African exchange, Adendorff says. Botswana was chosen because it is the only country in Africa with an A sovereign investment rating.

Pacdex has identified a diverse package of unique contracts that would offer traders around the globe a way to complement their existing contracts while venturing into the African market. The project is backed by the leaders of the African Union, who signed a declaration in November 2005 to move toward a regional exchange. Adendorff says Pacdex won't compete with the continent's existing agricultural derivatives market, Safex Agricultural Division, in South Africa. Part of the JSE, this exchange now focuses on maize futures, he says.

-Paula L. Green