Nasdaq OMX Group (
) is a leading global exchange group that delivers trading,
exchange technology, securities listing, and public company
services across six continents. According to our analysis, the
company derives 32% of its value from U.S. listed cash equities
trading. The NASDAQ stock market is the largest single pool of
liquidity for trading U.S.-listed cash equities, matching an
average of approximately 19% of all the U.S. equities volume for
2010. The biggest competitor to Nasdaq is NYSE Euronext (
) with 3 major exchanges in the U.S. - NYSE, NYSE Arca and NYSE
Amex. NASDAQ also faces competition from BATS Global Markets
and other regional exchanges.
We have a price estimate of
$25.87 for Nasdaq's stock
, which is about 5-10% below the current market price.
US Cash Equity Trading at a Glance
NASDAQ's transaction-based platforms in the U.S. provide market
participants with the ability to access, process, display and
integrate orders and quotes for cash equities. The platforms allow
the routing and execution of buy and sell orders as well as the
reporting of transactions for cash equity securities, providing
The speed of order execution and information availability are
major competitive factors for exchanges. NASDAQ, through its
R&D and innovation in trading technology has managed to gather
better volumes in the past few years.
Key Drivers of U.S. Cash Equity Trading
Average Daily Cash Equity Trading Volume
Trading volumes increased from about 5 billion in 2006 to nearly
10 billion in 2009, driven by the formulation of automated, volume
heavy techniques of trading like algorithmic trading. Volume
dropped in 2010 partially due to unforeseen market closures and
trading disruptions. Going forward, we anticipate a 10% annual
increase in cash equity trading volume.
Nasdaq's Market Share of U.S.-Listed
During 2006-08, Nasdaq was successful in gaining market share
due to its better technological infrastructure, but the
arrival of new stock markets like BATS Global and Direct Edge has
sparked a sharp decline in Nasdaq's market share over the past few
years. Nasdaq's market share declined from almost 30% in 2008 to
about 19% in 2010.
Going forward, we expect Nasdaq to regain some of its lost
position in the market as it continues to provide better trading
technology that increases speed and reduces trading costs.
See our complete analysis of Nasdaq OMX stock