Finance, Accounting and Control Case Study

NASDAQ and the Consolidation of Stock Exchanges: The Payoffs

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Abstract:
The National Association of Securities Dealers Automated Quotations (NASDAQ), one of the world's leading stock exchanges, gained its reputation by adopting technological innovations in trading systems. Since 1998 the global stock exchanges were moving towards consolidation, which offered them economies of scale, and reduced cost for traders. But companies were faced with a dilemma as to where they should enlist. The directives issued by the Securities and Exchange Commission that stock orders should be processed electronically launched a race for technological superiority among existing stock exchanges. To become a leader in the global electronic stock market, NASDAQ sought to acquire the all-electronic London Stock Exchange (LSE) in 2006. The case discusses the dynamics of the global stock market business through NASDAQ's aspirations to acquire LSE and the opportunities and challenges in store for NASDAQ.

Pedagogical Objectives:

• To understand the dynamics of the global stock exchange business
• To study the growth strategy of NASDAQ and its success factors
• To analyse the opportunities and challenges in the stock exchange business
• To understand the consolidation move and its impact on stock exchange business.

Keywords : NASDAQ, Consolidation of Stock Exchanges, New York Stock Exchange (NYSE), London Stock Exchange (LSE), Finance Case Study, Initial Public Offering (IPOs), Clearing and settlement (C&S), T+3 Trading System, Screen-based trading, 'Open outcry' System, Markets in Financial Instruments, Directive (MiFID), Mergers and Acquisitions, Competitive Drivers of Stock, Exchanges Business, NASD