Nasdaq, NYSE competition extends to Europe

NEW YORK (Reuters) - Nasdaq's (NDAQ.O) deal with Borse Dubai to buy Nordic bourse operator OMX AB OMX.ST and enter the Middle East and Asia will take its competition with the New York Stock Exchange one notch higher.

The two largest U.S. stock exchanges -- the Big Board, owned by NYSE Euronext (NYX.N), and Nasdaq -- compete fiercely on domestic turf for listings and market share.

NYSE acquired Euronext in April to form an entity that controls stock and derivatives exchanges in several European countries. With Nasdaq's entry into Europe, the two markets will be competing for European listings and trading volume.

Analysts said the technological strength of Nasdaq and OMX will provide the merged entity with a leg-up against competitors in Europe and emerging markets.

OMX, in addition to owning and running exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states, provides technology to about 60 exchanges worldwide, including the Australian Securities Exchange, Nordic power market Nordpool and the Singapore Exchange.

But NYSE and Euronext both have greater market share domestically and in Europe than Nasdaq or OMX, analysts said.

"NYSE Euronext currently has a tremendous head start in developing the 'global exchange,'" said Larry Tabb, a consultant with the financial research firm Tabb Group.

Future growth for exchanges will come from expansion into more "lucrative" markets in Europe and Asia, Tabb said.

NYSE Euronext Chief Executive John Thain said the Nasdaq deal illustrated that consolidation among exchanges will continue.

But "what's different in this case is the emergence of the Middle Eastern players," Thain said at the Dow Jones Private Equity Conference in New York.

Analysts said such deals might become more common, as Middle Eastern countries seek to establish a presence in global financial markets.

Dubai and Qatar will now collectively own 48 percent of the London Stock Exchange (LSE.L), which Nasdaq twice tried to buy unsuccessfully. Under Thursday's agreement, Dubai will buy 28 percent of LSE from Nasdaq. The state-owned Qatar Investment Authority also said on Thursday it had bought 20 percent of

LSE.

"Dubai and Qatar are not letting the world ignore them anymore," said Patrick O'Shaughnessy, an analyst who follows exchanges for Morningstar Inc.

"They have announced that they want to be part of the scene and the best way to do that and to get a higher profile is to join forces with some of the large exchanges," he said.