NDAQ Obtains 25% in Netherland's TOM - Analyst Blog
12 Dicembre 2012 - 6:05PM
Zacks
On Monday, NASDAQ OMX Group Inc. (NDAQ)
announced the acquisition of one quarter of Amsterdam-based The
Order Machine (TOM) – Dutch cash equity and equity derivatives
trading platform. The company has been offered an additional 25.1%
to acquire a majority stake in TOM.
TOM is partly owned ABN AMRO, IMC (a high-frequency trading
firm), Optiver (an electronic market maker) and BinckBank (an
online discount broker and bank that also provides order flow to
the trading venue). However, the acquisition is unlikely to have
any material effect on the financials of NASDAQ. Additionally, the
financial terms of the deal remain undisclosed and it is expected
to culminate upon the receipt of regulatory approvals.
Accordingly, the 8-year strategic alliance between the two
parties entails NASDAQ to provide its Genium INET technology to the
trading platform in London. On the other hand, NASDAQ will benefit
from the TOM’s presence in the European markets through the
one-fourth acquisition of TOM, thereby enhancing the company’s
global expansion strategy.
Additionally, the association with TOM brings in upgraded
technology and market expertise, as well as extended opportunity to
NASDAQ, enabling it tap the single stock options markets, where the
former holds a significant share. This should be helpful given the
rising demand for a variety of derivative products.
These factors will also accelerate NASDAQ’s ability to improve
price discovery and reduce its trading costs. Consequently, NASDAQ
will also reap benefits of flexible connectivity, thereby ensuring
low latency processes.
Gaining Edge in Europe
NASDAQ’s latest part-acquisition of TOM also elucidates its
strategic move to attain competitive edge in Europe, where
derivative giants including NYSE Euronext Inc.
(NYX) and Deutsche Boerse AG share majority of the market share.
Other dominant market players such as CME Group
Inc. (CME) are also seeking to greener pastures in Europe,
given the regulatory challenges faced in the US lately.
Expanding its derivative index in Europe, in June this year,
NASDAQ had also announced its plan to build a new interest rate
derivative trading platform – NASDAQ NLX – in London. The trading
platform is scheduled to debut by the first quarter of 2013. NASDAQ
NLX will operate as a separate entity within NASDAQ.
Further, in July 2012, NASDAQ purchased NOS Clearing ASA, a
Norwegian commodities clearing house, adding another operating arm
in Europe. Nevertheless, we cast a neutral outlook on the company’s
attempts to expand given the global economic volatility and
currently remain on the periphery to assimilate the future
developments.
NASDAQ carries a Zacks Rank #3 that implies a short-term Hold
rating, while the long-term recommendation stands at Neutral.
CME GROUP INC (CME): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
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