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Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues
Boards of Trade Regulation - Comment Letter - NASDAQ OMX - January 18, 2011
High Frequency Trading Regulation
European Swaps Regulation - OTC Derivatives Reporting - Comment Letter - Nordic Securities Association - April 14, 2010
__NOTOC__
Nasdaq, Inc., is a publicly traded company (NDAQ), which owns and operates 26 exchanges, three clearing houses and five central securities depositories. It also sells financial technology to exchanges and firms globally as well as data and investor services.
The company is best known for its Nasdaq Stock Market, which ranks as the second largest stock exchange by market capitalization. 
Beyond its network of equity and derivatives exchanges, Nasdaq also develops and provides the backbone technology for exchanges as well as banks, brokers and trading firms around the world. It offers listing services to companies and a variety of data services, from real time market information and analytics to corporate governance and investor services solutions. As such, Nasdaq has four main divisions: "trade" which is all of the Nasdaq exchanges, "tech" or technology products and services for other outside exchanges, "list", or the listing services for companies, and "intel," Nasdaq's data and information services.
Nasdaq's tech division provides the core technology needed to build and operate an exchange, clearing house, depository and surveillance department for a stock or derivatives marketplace. Nasdaq supports the operations of more than 70 marketplaces in over 50 countries for exchanges, clearinghouses, depositories and regulators. It also provides surveillance and risk management technology to more than 75 brokers in over 80 countries, as well as buy side and sell side firms. 
In terms of listing services on its own markets, it has more than 3,700 companies listed on its US, Nordic and Baltic exchanges, which represents more than $9.3 trillion in overall market value. Smaller companies can list on its First North market in Europe. It also operates Nasdaq Private Market to help firms identify partners and support before they go public.
 
Nasdaq's intel division offers more than 90 market data, global index and corporate solutions across 70 different countries for 2.5 million direct customers. It currently has about 41,000 Nasdaq global indexes. Corporate solutions provides distribution of market information for public and private companies' investor relations, public relations and governance departments.
The company was ranked as the 11th largest derivatives exchange in the world by contract volume in 2015, according to the annual Futures Industry Association's (FIA) survey.
Nasdaq's own market capitalization is $11 billion as of November 2016. 
== Background of the Combined Entity ==
===EARLY DAYS FOR NASDAQ===
Nasdaq was founded by the National Association of Securities Dealers, or NASD, which was charged with preventing market abuses after the Great Depression and wanted to create a way for investors to buy and sell stocks on a computerized, transparent, and fast system. The Nasdaq was founded in 1971 as a wholly-owned subsidiary of FINRA, and the Nasdaq Stock Market debuted on February 8 of that year as the world’s first electronic stock market, listing more than 2,500 securities.. 
The company underwent a restructuring in 1982, debuting its National Market System (NMS), later changed to Nasdaq National Market. The NNM added refinements such as making the price and volume information of each trade available 90 seconds after execution, as opposed to after the close of trading.
Nasdaq separated from the National Association of Securities Dealers in 1987. In 2000, NASDAQ membership voted to restructure and spin off Nasdaq into a shareholder-owned, for-profit company.
FINRA divested its ownership of Nasdaq in 2006, and The NASDAQ Stock Market became fully operational as an independent registered national securities exchange in 2007.
===Dot Com Boom Bust And Technology===
Nasdaq is credited with the invention of both electronic trading and the modern IPO. In the 1990s it revolutionized the equities trading world, introducing near-real time quotes for OTC stocks. It also helped usher in the era of public trading of technology companies like Apple, Microsoft, Oracle, Dell and Intel. During the technology company boom, or so-called "dot-com bubble," in the 1990s, Nasdaq benefited from the excitement over Internet and technology stocks. About 89 percent of all U.S. initial public offerings during 1999, for example, took place on Nasdaq, according to Nasdaq: A History of the Market That Changed the World by Mark Ingebretsen. But when the dotcom bubble collapsed in 2000, so did the Nasdaq Composite Index, losing 78 percent of its value that April. 
In 1991 Nasdaq became the first exchange to sell its technology to other exchanges, as well as the first to have an integrated derivatives trading and clearing system. In 1995, it became the first to sell market technology to Asia and Hong Kong. Nasdaq’s market technology is used by, among others, Hong Kong Exchanges and Clearing Limited, Singapore Exchange, Tokyo Commodity Exchange, Japan Exchange Group, Bursa Malaysia and SBI Japannext.
===Nasdaq's IPO, Bob Greifeld and Early Acquisitions===
Restricted shares of Nasdaq were initially sold by the NASD in 2000 through a private placement offering. 
Also in 2000, Nasdaq created Nasdaq-Liffe Markets (NQLX) as a joint venture between Nasdaq and LIFFE to offer trading in security futures, including single-stock futures, on the LIFFE CONNECT platform. NQLX shut down in October 2004 because of lack of liquidity and consolidated its remaining contracts into positions at OneChicago.
In June 2001, the company opened Nasdaq Europe, seeing it as a first step in implementing its global strategy in Europe. In November 2001 it announced a partnership between Nasdaq Europe and the Berlin Stock Exchange.
Trading restrictions expired in 2002 and shares began trading on the OTC Bulletin Board under the symbol NDAQ.
Robert Greifeld became the CEO of Nasdaq in 2003, when the company operated one equity market in the U.S., and led the company through a series of important acquisitions that expanded the company globally and into all asset classes. Rivalry between Greifeld's Nasdaq and John Thain's New York Stock Exchange heated up when the NYSE made a surprise purchase of the electronic exchange Archipelago in April of 2005, vastly upgrading its electronic offering when ECNs were on the rise. Two days later, Nasdaq acquired Instinet Group for $1.88 billion, giving it a greater share of the equity market.
 
On Feb. 9, 2005, NASDAQ listed its shares on The Nasdaq Stock Market following an offering of secondary shares priced at $9 per share.
Greifeld set on a course for more acquisitions after its IPO including two failed attempts 
to acquire the London Stock Exchange in ----. The second hostile bid was rejected by the LSE's shareholders in 2006, and LSE executives spurned further discussions with Nasdaq executives.
===NASDAQ Acquires OMX: Goes Global Multi-asset===
Nasdaq's rapid growth included a series of acquisitions of old established exchanges such as the Philadelphia Stock Exchange, the first exchange established in the U.S.; the Copenhagen Exchange, created in 1808; and the Boston Exchange, launched in 1834.
Nasdaq acquired the Nordic exchanges' OMX AB on February 27, 2008, resulting in an expansion of the business from a U.S.-based exchange operator to a global company offering its exchange technology to marketplaces all over the world. The acquisition made Nasdaq OMX Group the world's largest exchange company, hosting the trading of 4,000 stocks world-wide, and allowed it to provide trading platforms supporting multiple asset classes, as well as listings, financial services technology, data and financial products. Although OMX was little known to many U.S. investors at the time, some of the world's biggest brand names listed there, including Nokia and Volvo.
Nasdaq removed OMX from its branding almost seven years after the acquisition of the Nordic exchange group.
As part of the transaction, NASDAQ OMX Group also became a 33.33 percent shareholder in DIFX, Dubai's international financial exchange. Borse Dubai is a 19.9 percent shareholder of NASDAQ OMX Group.
Before the merger with OMX, the Nasdaq Stock Market (NASDAQ) listed itself as the world's second-largest cash equities platform by trading volume and the biggest electronic screen-based equity securities market in the U.S. in terms of listings and traded share volume.
Nasdaq launched a second equity exchange in Jan. 2009 after it acquired the Boston Stock Exchange in August of 2008 for $61 million and renamed it NASDAQ OMX BX. 
The company continued to expand into other assets classes, moving into US equity options in March of 2008 after receiving approval from the Securities and Exchange Commission to launch the NASDAQ Options Market, an equity and index options market.
The NASDAQ OMX Group acquired Nord Pool ASA, the world's largest power derivatives exchange and one of Europe's largest carbon exchanges, in 2010, and it became part of NASDAQ OMX Commodities.
===Nasdaq Goes To Philly and Into Interest Rates===
Nasdaq signed an agreement to acquire the Philadelphia Stock Exchange, the oldest stock exchange in the U.S., on November 7, 2007.
Nasdaq then launched a futures exchange in January of 2009 after it acquired the Philadelphia Board of Trade (PBOT) in 2008 as part of its acquisition of the Philadelphia Stock Exchange. The renamed NASDAQ OMX Futures Exchange (NFX) lists futures products, including interest rate swap futures, currency futures and sector index futures.
NFX currently offers trading in electricity, Henry Hub natural gas, Brent Crude oil, WTI Crude oil, heating oil and gasoil. 
Nasdaq's expansion into interest rate derivatives began with the launch of NASDAQ OMX NLX in London on May 31, 2013. (It was later rebranded Nasdaq NLX). The market, led by NLX CEO Charlotte Crosswell, started trading initially with six products including the German bund and Euribor, in direct competition with the two biggest exchanges in the region.
Nasdaq gained further exposure to the fixed income markets on July 1, 2013, when it acquired the electronic Treasuries trading platform eSpeed from BGC Partners Inc. The platform — which trades two-, three-, five-, seven-, ten- and 30-year instruments — became part of Nasdaq OMX's Transaction Services business. 
The exchange branched out further in 2013 with its acquisition of Thomson Reuters’ investor relations, public relations and Multimedia Solutions businesses. That same year the company also acquired eSpeed, the leading provider of electronic trading of U.S. Treasury Securities. 
===Greifeld & Sprecher Bid For The Big Board===
NASDAQ OMX Group and Intercontinental Exchange (ICE) attempted to acquire NYSE Euronext in 2011 for $11.3 billion, but withdrew its bid after the U.S. Department of Justice threatened an antitrust lawsuit. 
In 2013, NasdaqOMX Group acquired Thomson Reuters’ investor relations, public relations and Multimedia Solutions businesses.
Look at History in 10-K Form for more history - including Feb 2016 acquisition of Chi-X Canada ATS, Nord Pool in 2008, SMARTS in 2010, Dorsey, Wright & Associates in 2015, NASDAQ Private Market in 2015 (Important as this is the first market from Nasdaq to use blockchain technology), - http://business.nasdaq.com/media/SEC-NDAQ-1120193-16-20_tcm5044-25505.pdf
=== Facebook IPO Fallout ===
Facebook listed its IPO on Nasdaq on Friday, May 18, 2012, but trading in the stock was delayed and technical glitches led to confusion, incomplete orders and mispricing. When trading began at 11 a.m. the Nasdaq system was overwhelmed by 496,000 orders that sent Nasdaq’s computers into a continuous loop that made it impossible to establish a correct opening price for Facebook stock. 
In May of 2013 the SEC levied a $10 million fine against Nasdaq OMX regarding the problematic Facebook IPO . The SEC cited “poor systems and decision making” both before and after the Facebook initial public offering. In addition to the $10 million fine, Nasdaq had already agreed to pay $62 million to the brokers who lost money because of the problems.
In April 2015, Nasdaq OMX agreed to pay $26.5 million to settle a class-action lawsuit over the Facebook IPO. The suit said Nasdaq broke the law in failing to disclose technology weaknesses in its IPO systems and failing to properly design and test them for the Facebook offering. It was the first time a court had sustained a class action suit against a stock exchange. 
As part of the fallout from the IPO, in January 2014 Nasdaq said it no longer wanted to run the securities information processor, or SIP, the marketwide quote service that broke down and froze thousands of its U.S. stocks on August 22, 2013. However, Nasdaq later reconsidered and made a bid for the contract in 2014, becoming one of two finalists to run the SIP, the other being Tradeworx Inc.’s Thesys Technologies LLC. In November 2014 Nasdaq beat out Thesys and won the right to keep running the SIP, with a mandate to create a subsidiary to manage it.
==Company Overview ==
The company has four main divisions: Market Services, Listing Services, Technology Solutions and Information Services. 
Nasdaq Market Services	Nasdaq Market Services	Nasdaq Market Services	Nasdaq Market Services
Market Services includes Nasdaq's equity derivative trading and clearing, cash equity trading, fixed income, currency and commodities trading and clearing, or FICC, and access and broker services business.
The company's 26 exchanges include securities, futures and fixed income markets. 
The company's securities exchanges include the Nasdaq Stock Market, Nasdaq BX, Nasdaq PSX, the OMX Nordic Exchange, including First North and the 144A PORTAL Market. OMX Nordic Exchange is not a legal entity but describes the common offering from Nasdaq OMX Group exchanges in Stockholm, Helsinki, Copenhagen and Iceland. Nasdaq Baltic operates exchanges in Tallinn, Riga, and Vilnius.
Nasdaq owns and operates six US equity options exchanges, which combined handle 39.3 percent of US equity options volume, as of July 2016. Its six options exchange include three from the International Securities Exchange, acquired on June 30, 2016, along with the Nasdaq Options Markets (NOM), Nasdaq OMX BX and Nasdaq OMX PHLX.
The company's futures exchanges include: Nasdaq NLX, which lists European fixed income products, Nasdaq Futures or NFX, which lists energy and power contracts and Nasdaq Commodities, based in Oslo, Norway, which offers trading in power, natural gas and carbon emission markets, tanker and dry cargo freight, fuel oil, seafood derivatives, iron ore, electricity certificates and clearing services.
It also operates eSpeed, an electronic market acquired in 2013, for trading of US Treasuries.	 	 	
Nasdaq Listing Services 	Nasdaq Listing Services	Nasdaq Listing Services	Nasdaq Listing Services
Nasdaq's primary competitor for larger company listings in the U.S. is NYSE. It also competes with NYSE MKT for listing of smaller companies. In addition, BATS competes for ETP listings and has announced an intention to list corporate equities, and another potential competitor has an exchange license application pending with the SEC. The NASDAQ Stock Market also competes with local and international markets for listings by both U.S. and foreign companies that choose to list outside of their home country.	 	 	
Nasdaq Technology Solutions	Nasdaq Technology Solutions	Nasdaq Technology Solutions	Nasdaq Technology Solutions
- Nasdaq Corporate Solutions provides companies with public relations services
- Nasdaq Market Technology. Nasdaq sells its matching technology to more than 70 markets worldwide. It offers five different matching engines which can be run side by side.	 	 	
Nasdaq Information Services	Nasdaq Information Services	Nasdaq Information Services	Nasdaq Information Services
- Data Products: Nasdaq's Data Products business in the U.S. includes both proprietary and consolidated data products. Proprietary data products are made up exclusively of data derived from each exchange’s systems.
- Index Licensing and Services: Nasdaq's indexes, the NASDAQ-100 Index and the NASDAQ Composite Index, track the technology sector.	 	 	
== Key People ==
*Robert Greifeld, CEO 
*Meyer (Sandy) Frucher, Vice Chairman
*Bruce E. Aust, Vice Chairman
*Michael Ptasznik, Chief Financial Officer 
*Adena Friedman, President of Global Capital Access, Technology & Insights
*Hans-Ole Jochumsen, President of Global Market Services
*Brad Peterson, Executive Vice President and Chief Information Officer
*Thomas A. Wittman, Executive Vice President, NASDAQ OMX
*Lars Ottersgard, Executive Vice President, Head of Nasdaq Market Technology
*Fredrik Voss, Vice President and head of blockchain strategy
*Allan Schoenberg, Vice President, Global Communications
== Products ==
===Equities===
There are some 3,500 companies listed on Nasdaq exchanges globally. Market participants can trade non-Nasdaq listed securities on Nasdaq exchanges. 
Nasdaq operates three U.S. cash equity exchanges. In 2015, the Nasdaq Stock Market was the largest liquidity venue for U.S. cash equities.
Nasdaq offers trading of some European equities via its Nasdaq Baltic and Nasdaq Nordic exchange groups. 
===Indexes===
Nasdaq’s Global Index Family offers more than 41,000 indexes covering different asset classes that in sum represent some 98 percent of the investable global equity market. 
Nasdaq’s premier index is their eponymous Nasdaq 100, which includes the top 100 non-financial companies listed on the Nasdaq Stock Market.
Nasdaq’s PSX exchange was revamped in 2014 to specifically focus on exchange-traded funds, though ETFs are traded on a number of Nasdaq exchanges. 
===Fixed Income===
In the United States, Nasdaq offers trading in U.S. Treasuries — 2, 3, 5, 7, 10 and 30-year — via its eSpeed trading platform.
 
Nasdaq Nordic offers more than 1,000 different Swedish and Danish fixed income products such as Swedish government bonds and Danish mortgage bonds as well as products from Finland and Iceland. 
Through Nasdaq Baltic, Nasdaq offers access to Latvian and Lithuanian government bonds as well as corporate bonds. 
Nasdaq’s London-based interest rate platform, Nasdaq NLX, offers futures trading on German 2, 5, and 10 year government debt, as well as 3-month Euribor, 3-month sterling and long gilts. 
Nasdaq OMX Armenia offers some trading in corporate bonds. 
===Commodities===
Nasdaq’s commodity offerings, via Nasdaq Commodities, are predominantly power-related, such as natural gas, electricity and fuel oil. The exceptions to the power-theme are shipping, seafood, and ferrous metal contracts. The energy and emission component of Nasdaq Commodities stems from the 2008 acquisition of Nord Pool ASA (which formed the basis for Nasdaq Commodities), and the metals, freight and fuel asset classes came from the 2012 acquisition of NOS Clearing ASA. 
NFX, launched in September 2015, is Nasdaq's US-based energy derivatives market with contracts on oil, natural gas and US power. 
 
===Options===
Nasdaq operates six options markets with a variety of pricing structures, offering trading in equity options, index options, options on ETFs, and foreign exchange options. 
Nasdaq offers dollar settled FX options on seven currencies: the Japanese yen, Swiss franc, New Zealand dollar, euro, Canadian dollar, British pound and Australian dollar. 
In Europe, Nasdaq exchanges also offer trading in fixed income options, equity options, and index options. 
===Futures===
Nasdaq offers commodity futures through its NFX platform. 
Futures on equities, indexes, stocks and fixed income are available across an array of Nasdaq’s exchanges. 
== Contract Volume ==
Year	Total Annual Volume	Percent Change
2015	1,045,646,992 	(-)8.9%
2014	1,127,130,071 	(-)1.4%
2013	1,142,955,206 	2.5%
2012	1,115,529,138 	(-)13.9%
2011	1,295,641,151 	17.8%
2010	1,099,437,223 	34.8%
2009	815,545,867 	--
==2015==
Exchange 	Volume 	Percent Change
Nasdaq OMX PHLX 	623,514,666 	0.9%
Nasdaq Options Market 	286,845,485 	(-)25.7%
Nasdaq OMX Nordic 	99,990,848 	8.9%
Nasdaq OMX Boston 	31,496,313 	(-)0.3%
Nasdaq OMX Commodities	3,013,983 	76.4%
Nasdaq NLX 	785,697 	(-)95.7%
Nasdaq OMX 	1,045,646,992	(-)8.9%
== Hours ==
NASDAQ Stock Market Trading Sessions (Eastern Time):
*Pre-market trading hours from 7 a.m. to 9:30 a.m.
*Market hours from 9:30 a.m. to 4 p.m.
*After-market hours from 4 p.m. to 8 p.m.
== Clearing ==
NASDAQ OMX operates its own clearinghouses and provides clearing and other post-trade technology to marketplaces around the world.
NASDAQ OMX Clearing offers clearing of the following asset classes:
*Equity and index derivatives on the Nordic and Baltic markets
*Fixed income derivatives on the Nordic markets
*Commodity derivatives on Nordic power, emission rights, gas, German and Dutch power as well as physical contracts for the British electricity market and derivatives on these.
*OTC trades done outside the regulated markets and reported to the clearinghouse for clearing.
In March 2014, Nasdaq OMX became the first market infrastructure owner to receive approval for its clearing house to operate under stricter new European regulations designed to tighten oversight of derivatives markets. The new regulations are part of a move to mandatory clearing of derivatives trades in Europe, which is set to go into effect in 2014. The approval came from the Swedish Financial Services Authority, after the European college of regulators overseeing the application gave its assent the previous week. 
== Acquisitions and Agreements ==
NASD merged with the American Stock Exchange in November 1998, creating "The Nasdaq-Amex Market Group." The American Stock Exchange remained as an active exchange.
*Nasdaq made two failed attempts to acquire the London Stock Exchange, the second of which was rejected by the LSE's shareholders in 2006; the offer expired on February 10, 2007.
Nasdaq acquired the Philadelphia Stock Exchange, the oldest stock exchange in America, in 2007.
*On Aug 29, 2008 Nasdaq completed the acquisition of the Boston Stock Exchange (BSE) for $61 million. 
*NASDAQ OMX received SEC approval to launch its new equity and index options market, the NASDAQ Options Market, on March 12, 2008.
*On Oct. 17, 2008, Nasdaq OMX Group acquired a 22-percent equity stake in European Multilateral Clearing Facility (EMCF) from Fortis Bank Nederland. EMCF, the central counterparty clearing house for European equity trading on exchanges and multilateral trading facilities (MTFs), was transferred into government hands earlier in the month as part of the Dutch government’s bank bailout. EMCF is now equally owned by Nasdaq OMX, BATS Chi-x Europe, ABN AMRO Clearing Bank and The Depository Trust & Clearing Corporation (DTCC).
*On Oct. 21, 2008, Nasdaq OMX acquired the consulting and clearing units and international derivatives products of Nord Pool of Oslo for about 2.3 billion Norwegian kroner ($412 million). 
*Nasdaq OMX acquired the Philadelphia Board of Trade (PBOT) in 2008 as part of its acquisition of the Philadelphia Stock Exchange and renamed it the NASDAQ OMX Futures Exchange.
*In 2010, Nasdaq acquired FTEN, a company that provides real-time risk management solutions. 
*On February 8, 2012, NASDAQ OMX launched a spot gold futures contract in partnership with Ikon Global Markets, a futures commission merchant registered with the CFTC.
*On March 6, 2012, Nasdaq announced NASDAQ OMX Nordic's creation of the Genium INET all-asset and cross-market technology platform, with asset classes from all eight markets in Sweden, Finland, Denmark, Norway, Iceland, Lithuania, Latvia and Estonia available.
*Nasdaq launched its interest rate derivatives platform NASDAQ OMX NLX in London on May 31, 2013. 
*On July 1, 2013, the company acquired the electronic Treasuries trading platform eSpeed from BGC Partners Inc. 
*Trading Technologies International, Inc. (TT) connected to NASDAQ OMX NLX in December 2013, allowing Nasdaq customers to use TT's X_TRADER order software. TT connected to Nasdaq OMX eSpeed on March 4, 2014. Early in December of 2013, TT launched connections to the NASDAQ OMX Nordic market and NASDAQ OMX NLX.
*In January of 2015 Nasdaq acquired Dorsey Wright, a US index provider and analytics group, bringing it further into the market for indexing and exchange-traded funds.
*On June 9, 2015 Nasdaq and Trading Technologies International, Inc. (TT) announced that TT would connect the exchange's German power and Nordic benchmark power market contracts, among other European operations, through a new platform with mobile capabilities. 
* The company acquired SecondMarket Solutions in November of 2015 and combined it with the NASDAQ Private Market to facilitate the exchange of shares for private companies. The expanded NASDAQ Private Market business is headquartered in San Francisco and New York and headed by Bill Siegel, CEO of SecondMarket.
* Nasdaq acquired Chi-X Canada, an alternative market in Canada for the trading of Canadian-listed securities, from Chi-X Global in 2016. The deal expanded Nasdaq's North American equities trading business beyond the U.S.
* On June 30, 2016, Nasdaq acquired the International Securities Exchange for $1.1 billion. 
== Structure and Business Model ==
OMX has three business units. Nordic Marketplaces includes exchanges in Stockholm, Helsinki, Copenhagen and Iceland, as well as the First North alternative market launched in 2006, and accounted for 48 percent of group revenues in that year.
The equities platform ranks as the fifth-largest in Europe, while the derivatives platform traded 137 million contracts in 2006.
The Market Technology division contributed 35 percent of sales in 2006, providing trading and settlement platforms to customers including X and Y. The Information Services and New Markets division provided 17 percent of revenues.
== References ==
Category:Exchanges
Category:Stock Exchanges
Category:North American Exchanges
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