Investor Agenda

Nasdaq CEO on Earnings, Facebook, NYSE-Deutsche Deal Blocked

Nasdaq OMX posted its second-best quarter ever on a non-GAAP basis Wednesday, in a declining volume environment.

NASDAQ Chairman Bob Greifeld
Taylor Hill | FilmMagic | Getty Images

Nasdaq CEO Bob Greifeld told Maria Bartiromo in a CNBC exclusive interview that today’s results “showed the strength of our business model where we diversified away from a transaction-based business model.”

Greifeld has worked hard to diversify Nasdaq OMX’s business.

“One of our most successful new ventures is in the U.K. The U.K power market with three of the six largest providers now contributing every day to our options. That grew 100 percent quarter on quarter. So, fairly remarkable," said Greifeld.

Growth From All Cylinders

Lackluster volume has been a real problem for all the exchanges and financial-services businesses. Of course, the boss at the Nasdaq OMX would like to see higher volume, since they’ve “built the model to be resilient to both down times and up times," said Greifeld.

Greifeld pointed out "when you look at 2011, we had one month of good volume. That was August. In 2010 it was really about six weeks, in May and June. So in our model and our planning we really count on one to two months of good volume. And the others, if they're mediocre, we can get along."

“We do that because of the diversification of our model. Even in our transaction services business half the revenue now comes from recurring revenue. Non-transaction related revenue. So we've been focused on what can we do beyond providing the trading to make it easier for our customers to be in the business. And that's been a source of value for our customers and growth for us,” Greifeld added.

Greifeld maintains we'll see growth from all cylinders from the Nasdaq OMX. "When we look at the diversified businesses, whether it's US options, whether it's derivatives business, whether it's our commodities business, market technology, we see that each and every one of our businesses really are producing at a relatively high level. So I don't want to single out one particular area, but we certainly see big opportunities in the derivatives market for us,” said Greifeld.

Facebook to List on Nasdaq?

Greifeld doesn't know if Facebook will list on the Nasdaq but he said they will give it their “best shot.” Greifeld and his team will make a strong push to bring Facebook to Nasadaq. "We're focused on providing to Facebook a clear description of the value propositions we offer. When you talked about the IPOs that came to market in the fourth quarter, we've done very well. We got Zynga and Groupon to come to Nasdaq," said Greifeld.

When asked about what the Facebook listing would mean for Nasdaq, Greifeld believes from a branding point of view it’s very important, but from an economic point of view it's not directly important. Greifeld said “our maximum listing fee is $99,000 and in a multi-billion organization it doesn't move a needle. But still, it's important to us.”

Greifeld believes the Nasdaq comes to those discussions from a relatively strong position. “Obviously, we're well represented in the technology sphere, but in the fourth quarter we really had a wonderful quarter with respect to companies leaving the competitive exchange and coming to Nasdaq,” said Greifeld.

Greifeld pointed out the suite of products the Nasdaq has developed in the past five years to make it easier for a company to go public. Greifeld said, "Okay, we know it's hard. We know there's a lot of rules and regulations, being a public company. Let us ease the burden. That's been a differentiating factor for us in the marketplace.”

NYSE Euronext – Deutsche Boerse’s Deal Blocked

Greifeld maintains that the blocked deal between NYSE Euronext and Deutsche Boerse “does not impact the Nasdaq directly. We've been saying for the last 18 months or so that we've been focused on organic growth, both on acquisitions and capital returns to shareholders. So we're continuing to do that.”

Nasdaq paid great attention to the transaction, but Greifeld said “it didn't impact our day-to-day lives in any meaningful way.”

“What we learned from us trying to buy NYSE, and Deutsche Boerse trying to buy NYSE, is that if you try to do a deal where you're ending up with 90 percent market share it's probably problematic. Right? So we got turned down in a hard ‘no’ by DOJ. Obviously, Deutsche Boerse got turned down today. So we certainly believe they'll be deals in the exchange space, but it's going be hard to do a deal where you see such an overlap and dominant position coming out of the market,” Greifeld added.

IPO Pipeline Looking Good

As for the pipeline this year, Greifeld said "the best news I can give you is that we actually have more IPOs in the pipeline than we've had in the last 10 years."

Donna Burton contributed to this article.



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