Nasdaq head Bob Greifeld questions SEC market panel

The head of Nasdaq, the US exchanges operator, has questioned the composition of a new panel to advise regulators on reform of US equity markets for omitting exchanges with corporate listings.

Earlier this month the Securities and Exchange Commission announced a 17-person strong advisory committee to explore “the role of exchanges in the current market structure”.

While it includes a former senator, academics, and representatives of fund managers, Wall Street brokers and electronic market makers, there was no place for either the New York Stock Exchange or Nasdaq.

“We were very disappointed not to be included on the committee,” said Bob Greifeld, chief executive of Nasdaq, the most popular destination in the US for initial public offerings last year. “It’s quite remarkable that there’s no one representing issuers. It’s a curious make-up of the committee.”

The panel was devised by the agency as part of a review announced last year to examine a range of issues that have come to dominate discussions of US equity markets, such as high-frequency trading, conflicts of interest and dark pools.

At its unveiling, Mary Jo White, chair of the SEC, said that “secondary markets exist for investors and public companies, and their interests must be paramount”.

Mr Greifeld’s comments came as Nasdaq reported an uptick in organic revenue growth in the final quarter of 2014, boosted by increased trading on its cash equities trading market.

Fourth-quarter net revenues to December 31 were down 1 per cent year-on-year to $517m. But on an organic basis, and stripping out the impact of foreign exchange rates, net revenues in the period rose 3 per cent.

Operating income in the period rose 7 per cent to $221m as Nasdaq cut costs by 5 per cent. Net income in the final three months fell from $141m to $87m as it spent more money on strategic initiatives and deals. Another deal, the $225m purchase of Dorsey Wright, a US index provider and analytics group, is due to close on Friday, Mr Greifeld added.

‘We were very disappointed not to be included on the committee. It’s quite remarkable that there’s no one representing issuers’

He said Nasdaq was better positioned than a year ago to accelerate organic growth and confirmed the group was interested in foreign exchange trading venues. Nasdaq’s domestic rival Bats Global Markets on Wednesday agreed to purchase Hotspot, a currency trading unit of KCG Holdings in a deal worth up to $435m. While he admitted he was looking at potential platforms, Mr Greifeld noted: “At certain prices it doesn’t make sense.”

For the year, Nasdaq reported an increase in turnover from $1.9bn to $2.1bn and an increase in net income from $384m to $413m.

The exchange’s standout unit in the fourth quarter was its cash equities business, which reported a $9m increase in trading revenues to $59m from higher trading volume and rising market share. Diluted earnings per share in the period rose from $0.69 to $0.75.

www.ft.com/tradingroom