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Wednesday, 7 February, 2001, 17:05 GMT
Nasdaq turns thirty
The Nasdaq boom came hand in hand with a rise in US share ownership
The Nasdaq boom mirrored share ownership boom
The world's first electronic stock market turns 30 on Thursday.

Mention Nasdaq and people automatically think of the technology stock rollercoaster of the past few years.

Its aggressive US advertising campaign - including a trading billboard in New York's Time Square - helped make its name a byword for companies that make up the new economy.

But like the technology stocks that ensured its high profile, Nasdaq has only recently entered the mainstream of popular culture.

And like them, it is now also approaching one of its most testing times.

Nasdaq future

Nasdaq's track record is impressive.

It now lists nearly 5,000 companies, has a larger dollar volume and trades more shares per day than any other US market.

Even though its main index ended last year 39% lower at 2,470 points, the index still set records for share and dollar volumes.
Korean stock market
Stock markets world wide take their lead from Nasdaq

The dollar value of trading was a record £20.4 trillion, 85% higher than in 1999.

The most heavily traded shares are some of the the most high profile technology companies, Cisco, Intel, Oracle, Sun and Microsoft.

While gaining a reputation for its success in attracting new economy stocks, Nasdaq's history dates back to 1961 when the US Congress ordered a study which identified fragmentation and inefficiency among the country's exchanges.

The solution proposed was the first electronic stock market, launched in 1971 as Nasdaq.

The subsequent Nasdaq boom has come hand in hand with a boom in share ownership.

In 1980, stocks accounted for about 10% of US household wealth: by 1998, this was 25%, Nasdaq chairman Frank Zarb said.

Global ambitions

Now, like every other stock exchange in the world, Nasdaq wants to set up the first global marketplace accessible through the internet.

"I am more convinced than ever that the stock market in the new millennium will be available to anyone, anywhere in the world, 24 hours a day, seven days a week," Nasdaq's Frank Zarb said last year.

It has made repeated efforts to link with a European exchange and is now mooted to be in talks with Easdaq.

Vice chairman Al Berkeley has said they hope to break into the European market via a deal with either Easdaq or the London Stock Exchange (LSE) in the next three to six months.

Like the LSE and Deutsche Börse before it, Nasdaq is likely to find that the sheer difficulties of marrying technology and cultures can stymie even the most enthusiastic of merger partners.

The stock market in the new millennium will be available to anyone, anywhere in the world

Nasdaq's Frank Zarb

Nasdaq's parent, the National Association of Securities Dealers, has raised about $500m from two private placements, so the US exchange does have some money to spend.

These private placements also continue the process of separating Nasdaq from NASD.

The last available figures show that in 1999, Nasdaq had revenues of $1,117m, 59% higher than in the previous year.

The jump can largely be attributed to the rise in trading volumes, with about $300m of these revenues from transaction services.

Market information counted for about $276m of revenues, while issuer services brought in about $177m of revenues.

Technology future

Now that Frank Zarb has stepped down as chief executive - becoming chairman instead - Nasdaq has gained a new chief executive, Hardwick Simmons.

He joins shortly after the exchange gained SEC approval for its SuperMontage trading system.

For the first electronic stock exchange in the world, technology remains key in ensuring it retains an edge against its global competitors.

The new SuperMontage system - to be introduced early next year - should allow marketmakers and traders to have faster and more in-depth information.

Clawback

SuperMontage should help Nasdaq claw back some of the estimated 30% of business it has lost to private electronic markets.

Part of this loss can be attributed to recent studies which found that Nasdaq was one of the more expensive markets to trade on.

These Electronic Communications Networks automatically match buyers and sellers, cutting out the middlemen.

The original ECNs were set up partly in response to Nasdaq members' reluctance to always advertise their best bids and offers.

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25 Jan 01 | Business
Nasdaq assembles war chest
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