Nasdaq Pushes Into Europe With Hopes to Build Up the Small Easdaq

Hoping to kick start its global expansion plans in Europe, the Nasdaq Stock Market Tuesday announced it plans to purchase a majority stake in the fledgling Brussels-based exchange Easdaq, which it will rename Nasdaq Europe.

"We're putting together the third part of our global market," along with Nasdaq Japan, Nasdaq Chairman Frank Zarb said in a morning conference call detailing the European market investment. "We have now established a direction, and we continue to fill out that plan."

Zarb wouldn't disclose the price Nasdaq is paying for the Easdaq stake, but he said Nasdaq's contribution of cash and technology would be the equivalent of about $70 million euros. That will give Nasdaq a 58 % stake in Easdaq initially, although that is expected to fall to 51 % if other investors it has invited to take part in the exchange do so. Zarb declined to name those investors. The Nasdaq investment must be approved by Easdaq shareholders, who have scheduled a vote for Friday.

Easdaq is diminutive compared to Nasdaq. The European exchange has 62 listed companies compared with the nearly 5,000 on Nasdaq.

Ronald Cohen, co-chairman of Easdaq, said the new market will prove invaluable to European venture capitalists and entrepreneurs.

"I think in the IPO area, Nasdaq Europe will become the market of choice," said Cohen, who's been affiliated with Easdaq since it was created in 1995. "It's an extremely complicated thing for a European company to raise capital internationally."

Nasdaq said it plans to introduce a trading system for the new Nasdaq Europe in May or June. It is to be modeled after Nasdaq's U.S. technology and will be called the European Trading System, ETS. Nasdaq expects most securities listed on the new Nasdaq Europe to be traded in Euros, although it said companies could trade in U.S. dollars or pounds sterling as well.

The Easdaq investment was the second European effort Nasdaq has announced this week. On Monday, the exchange sealed a partnership deal with the London International Financial Futures and Options Exchange to list single-stock futures for U.S. and European customers.

Nasdaq has long spoken of setting up a worldwide exchange, though those discussions a year ago were taking place in a far more robust U.S. market climate.

Zarb defended the Nasdaq's investment in Easdaq now, which comes amid a precipitous slump in the value of shares trading in U.S. markets. "The time to do these transactions is in a down market," he said. "Markets have cycles. ... At some point these markets come back. They always come back bigger."