Nasdaq OMX Group Inc.
) unexpectedly dipped 1.5% to $39.0 after it ended year 2013 with
the culmination of a strategic business deal with Turkey's sole
stock exchange -- Borsa Istanbul. The deal, signaled in July
2013, encompasses Nasdaq to offer its globally comparable,
superior-quality and complete market technology to the Turkey
Per agreement, Nasdaq will acquire 5% equity stake in Borsa
Istanbul and share its trading, clearing and infrastructure
expertise, including the Genium INET technology, for all asset
classes, with the Turkey stock exchange for an undisclosed
amount. Borsa Istanbul will also be able to resell or make use of
this software in 25 countries.
This is a progressive step by Nasdaq to explore the emerging
markets of the Eurasia region, Turkey being a key developing
economy therein. The deal will also enhance the company's
non-transaction based revenue sources, while generating
incremental cash synergies.
On the other hand, Borsa Istanbul has also agreed to buy a
minority share in Nasdaq, about 2% stake, eventually in order to
boost its global presence as a stock exchange operator. However,
the decision on swapping of stakes may materialize only by
The business developments are also part of Borsa Istanbul's
strategy to expand its operations in the technology and
products space, in order to become a leading integrated
multi-asset exchange. It also seeks to begin listing by the end
of 2015. Hence, the technology-alliance with Nasdaq will likely
empower Borsa Istanbul to attract more investors toward its
Given the competitive concerns and the changing dynamics of
the global stock exchange industry, we believe that Nasdaq's
business efforts are well-timed and crucial for its long-term
growth. However, technical glitches in the past have raised
doubts over the company's technical competence in the near
Hence, we remain on the periphery at present to analyze the
future course of action that Nasdaq takes to avoid any technical
malfunction that causes flawed pricing within equities. Our
neutral opinion on Nasdaq is also justified by its Zacks Rank #3
Some better-ranked stocks in the financial sector include
IntercontinentalExchange Group Inc.
American Express Co.
). All these stocks carry a Zacks Rank #2 (Buy).
AMER EXPRESS CO (AXP): Free Stock Analysis
INTERCONTNTLEXC (ICE): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
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