UPDATE 1-US to review security issues in Nasdaq/Dubai deal

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By Jeremy Pelofsky

WASHINGTON, Sept 20 (Reuters) - U.S. President George W.
Bush said on Thursday a national security review will be
conducted on a planned investment by Dubai's state-owned stock
exchange in the U.S.-based Nasdaq (NDAQ.O).

"We are going to take a good look at it as to whether it
has any national security implications involved in the
transaction," Bush said in response to a question about the
deal during a news conference. "I'm comfortable with the
process."

Nasdaq and Borse Dubai struck a complicated deal on
Thursday in which Dubai gets Nasdaq's stake in the London Stock
Exchange (LSE.L) and buys 20 percent of Nasdaq itself. The
agreement also ended a tussle between Nasdaq and Borse Dubai to
buy Nordic markets operator OMX AB OMX.ST.

Bush was referring to a review by the U.S. interagency
Committee on Foreign Investments in the United States (CFIUS).
The CFIUS panel is led by the U.S. treasury secretary and
includes senior officials from the Departments of Commerce,
Defense, Justice and State.

The U.S. Senate and House of Representatives have approved
legislation that would overhaul the CFIUS review process and
increase scrutiny of transactions that involved the sale of
critical U.S. infrastructure.

The reform legislation was introduced after CFIUS last year
approved the acquisition of some key port operations in the
United States by state-owned Dubai Ports World. Critics in
Congress from both parties said CFIUS did not take enough time
to consider the security implications.

Dubai Ports World later relinquished control over the U.S.
port operations and sold them to an American company.