One on One with Robert Greifield, CEO, NASDAQ
Thursday, February 28, 2008
|
|
|
|
SUSIE GHARIB: The NASDAQ is much bigger tonight. Just yesterday it completed a $4 billion acquisition of OMX, the stock exchange based in Sweden. The new combination is now called NASDAQ OMX Group. This morning I talked with NASDAQ CEO Robert Greifield and asked him what are the benefits of this deal.
ROBERT GREIFELD, CEO, NASDAQ: Well, we have established now the first truly global exchange. We will have operations on six continents. We will trade a wide variety of asset classes, so I think as a result of this combination, we will be able to bring additional trading services, liquidity to our customers and also obviously benefits to our investors.
GHARIB: To pull off the OMX deal, you teamed up with the Dubai Stock Exchange and now as a result, it has about a 20 percent stake in NASDAQ. So how should investors view this new Dubai connection, friendly shareholder or potential acquirer?
GREIFIELD: I think they should view it in a very positive light. Clearly before we had this transaction approved, we voluntarily went down to Washington and put the transaction up for CFIUS review. We passed the sipius review and that review was conditioned on the fact that Dubai would own 19.9 percent. So I think they are stable at the 19.9 percent, the 5 percent voting limitation. We see them as a wonderful long-term shareholder and look forward to working with them.
GHARIB: Certainly there is a lot of investment activity going on in the Middle East. Do you see that this Dubai connection is going to open up opportunities for NASDAQ in the Middle East?
GREIFIELD: Oh, definitely. We think this will be an opportunity for explosive growth and we will participate. So certainly the expertise we bring, the technology, the branding, the western rule sets will help establish Dubai as a valuable market center for the western world to meet the Middle Eastern world and the developing world, so we think there is just tremendous opportunity.
GHARIB: Bob, you are about to close on your purchases of the Philadelphia Stock Exchange and the Boston Stock Exchange. How do those transactions fit into NASDAQ's strategy?
GREIFIELD: Well, it is very straightforward. We believe that we have a tremendous processing engine. We want to put more volume through it. So Philadelphia has done a wonderful job in the options marketplace. They've grown market share in a market itself which is expanding rapidly. So we're very happy to be properly positioned in the derivatives space, in the fast- growing part of the derivative space, which is the options marketplace. And we're certainly impressed with what Philadelphia and the management team has accomplished.
GHARIB: How big a player can you be in the options market?
GREIFIELD: I had established a goal of being a 20 percent market share player within three years. That was about a year ago. And it is our goal to reach that probably sooner rather than later, so that our interim target. Obviously once we get to 20 percent, we'll recalibrate and see where we can go from there.
GHARIB: We've seen so much volatility in the markets. How is that impacting NASDAQ's business?
GREIFIELD: It's been wonderful for us. And the volatility drives volume. We get paid upon volume. So we saw record volumes come to us in this first quarter. The day after the Martin Luther King holiday, the U.S. equity market traded 11 billion shares. And we had a record market share day. I think was very interesting is when the market has a lot of volatility in it, we're widely reputed to have the most reliable, fastest systems. And there is a flight to quality, so our market share goes up.
GHARIB: Don't you need a bull market to really continue to grow your earnings?
GREIFIELD: Not necessarily, but we certainly will be helped in by a bull market. Our transaction business, when you look at volume over an historical period of time, tends to increase. So even when you look at the bursting of the dot come bubble, the growth of the volume moderated, but it did not pull back. So we expect an ever expanding amount of volume to come to the market and certainly the trend lines supports that.
GHARIB: It has been a pretty rough year so far for NASDAQ stocks, especially those high-tech darlings. What is your outlook for NASDAQ stock performance 2008?
GREIFIELD: We don't give a forecast.
GHARIB: I know.
GREIFIELD: Because we just certainly are not in that business and we have no special insight. I mean really what we can bring to the discussion is a intimate relationship with a large number of CEOs. Most CEOs say my business is still doing fairly well. But they are watching it very closely. And we at NASDAQ are in the same mode. Our business is doing, in fact, very well. But we are certainly on all guard to see you know, how it might turn, but so far, so good.
GHARIB: Bob thank you so much.
GREIFIELD: I appreciate your time.
GHARIB: Always good to see you.
GREIFIELD: It great to see you.
