Update: Nasdaq Lines Up Investment From Equity Firm

Updated from 11:31 a.m. ET

The Nasdaq Stock Market said an equity investment firm has agreed to invest $240 million in the exchange as it attempts to restructure into a private, for-profit securities market.

Hellman & Friedman, which is based in San Francisco, agreed to buy $240 million of debentures that will be convertible into Nasdaq common stock at any time in the next five years. The exchange plans to use most of the investment to buy back Nasdaq shares from the National Association of Securities Dealers, reducing the NASD's ownership to about 27% on a fully diluted basis.

"It satisfies what the NASD wants to do," NASD Chairman Frank Zarb said in an afternoon teleconference on the deal. "The size speaks for itself. It's an important step." ...