Profile: NASDAQ OMX Group Inc (NDAQ.O)
4 Dec 2013
The NASDAQ OMX Group, Inc. (NASDAQ OMX), incorporated on November 13, 1979, is a holding company. NASDAQ OMX is a global exchange group that delivers trading, clearing, exchange technology, regulatory, securities listing, and public company services across six continents. Its global offerings are diverse and include trading and clearing across multiple asset classes, market data products, financial indexes, capital formation solutions, financial services and market technology products and services. Its technology supports cash equity trading, derivatives trading, clearing and settlement, and many other functions. The Company operates in three segments: Market Services, Issuer Services and Market Technology. In the United States, it operates The NASDAQ Stock Market LLC (The NASDAQ Stock Market), a registered national securities exchange. In August 2012, the Company sold IDCG to LCH. In June 2013, the Company announced the completion of its acquisition of Thomson Reuters Investor Relations, Public Relations and Multimedia Solutions businesses, which provide insight, analytics and communications solutions. In July 2013, BGC Partners Inc announced that it closed the sale of its on-the-run, 2-, 3-, 5-, 7-, 10-, and 30-year fully electronic trading platform for U.S. Treasury Notes and Bonds to NASDAQ OMX Group, Inc.
The NASDAQ Stock Market is the single cash equities securities market in the United States. As of December 31, 2012, The NASDAQ Stock Market was home to 2,577 listed companies. In addition, in the United States, the Company operates two additional cash equities trading markets, two options markets, a futures market and a derivatives clearinghouse. It is also engaged in principal trading of over-the-counter (OTC) power and gas contracts. In Europe, NASDAQ OMX operates exchanges in Stockholm (Sweden), Copenhagen (Denmark), Helsinki (Finland), and Iceland as NASDAQ OMX Stockholm, NASDAQ OMX Copenhagen, NASDAQ OMX Helsinki and NASDAQ OMX Iceland (NASDAQ OMX Nordic), and exchanges in Tallinn (Estonia), Riga (Latvia) and Vilnius (Lithuania) as NASDAQ OMX Tallinn, NASDAQ OMX Riga and NASDAQ OMX Vilnius (NASDAQ OMX Baltic). Collectively, the exchanges that consist of NASDAQ OMX Nordic and NASDAQ OMX Baltic offer trading in cash equities, bonds, structured products and exchange traded funds (ETFs), as well as trading and clearing of derivatives and clearing of resale and repurchase agreements. Through NASDAQ OMX First North, its Nordic and Baltic operations also offer alternative marketplaces for smaller companies. In July 2012, the Company acquired NOS Clearing, a Norway-based clearinghouse primarily for OTC traded derivatives for the freight market and seafood derivatives market. In May 2012, the Company acquired a 72% ownership interest in BWise, a Netherlands-based service provider that offers enterprise governance, risk management and compliance software and services to help companies track, measure and manage key organizational risks.
As of December 31, 2012, the exchanges that consist of NASDAQ OMX Nordic and NASDAQ OMX Baltic, together with NASDAQ OMX First North, were home to 754 listed companies. The Company also operates NASDAQ OMX Armenia. In addition, NASDAQ OMX Commodities operates the power derivatives exchange, which is Europe’s carbon exchanges and together with Nord Pool Spot, N2EX, a marketplace for physical United Kingdom power contracts. In some of the countries where it operates exchanges, the Company also provides clearing, settlement and depository services. In December 2012, the Company entered into an agreement with Thomson Reuters to acquire its Investor Relations, Public Relations and Multimedia Solutions businesses.
NASDAQ OMX’s Market Services segment includes its United States and European Transaction Services businesses, which include Access Services, as well as its Market Data and Broker Services businesses. The Company offers trading on multiple exchanges and facilities across several asset classes, including cash equities, derivatives, debt, commodities, structured products and ETFs. In addition, in some of the countries where it operates exchanges, it also provides clearing, settlement and depository services. In the United States, NASDAQ OMX offers trading in cash equity securities, ETFs on our cash equities, options and futures markets and engages in riskless principal trading of OTC power and gas contracts through NASDAQ OMX Commodities Clearing (NOCC). Its transaction-based platforms in the United States provide market participants to access, process, display and integrate orders and quotes for cash equity securities, derivatives and ETFs. The platforms allow the routing and execution of buy and sell orders, as well as the reporting of transactions for cash equity securities, derivatives and ETFs, providing fee-based revenues.
The NASDAQ Stock Market is a single pool of liquidity for trading the United States-listed cash equities. NASDAQ OMX also operates two additional United States cash equities markets, which include NASDAQ OMX BX and NASDAQ OMX PSX. With these markets, it offers a second and third quote within the United States cash equities marketplace. As with The NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX PSX are run on its INET trading system, providing customers additional cash equity securities markets using familiar technology. NASDAQ OMX’s fully electronic United States transaction-based platforms provide members with the ability to access, process, display and integrate orders and quotes in cash equity securities on The NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX PSX. Market participants include market makers, broker-dealers, alternative trading systems (ATSs) and registered securities exchanges. These services are offered for NASDAQ-listed and non-NASDAQ-listed securities.
All the United States registered national securities exchanges and securities associations are required to establish a transaction reporting plan for the central collection of price and volume information concerning trades executed in those markets. Trades executed on its cash equities exchanges are automatically reported under the appropriate transaction reporting plan. The NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX PSX earn revenues for all of the trades in the form of shared market information revenues under the Unlisted Trading Privileges Plan (the UTP Plan) for NASDAQ-listed securities and under the Consolidated Tape and Consolidated Quotation Plans for securities listed on the New York Stock Exchange (NYSE) NYSE Amex and other exchanges.
Through The FINRA/NASDAQ Trade Reporting Facility (FINRA/NASDAQ TRF), the Company collects reports of trades executed by broker-dealers outside of its exchanges. The FINRA/NASDAQ TRF collects trade reports as a facility of FINRA. In addition to trade reporting and trade comparison services, it provides clearing firms with risk management services to assist them in monitoring their exposure to their correspondent brokers. In the United States, the Company operates The NASDAQ Options Market and NASDAQ OMX PHLX for the trading of equity options, ETF options, index options and foreign currency options. As of December 31, 2012, NASDAQ OMX PHLX, which operates a hybrid electronic and floor-based market, was an options market in the United States. NASDAQ OMX’s options trading platforms provide trading opportunities to both retail investors and algorithmic (high-frequency) trading firms.
In the United States, the Company also operates NFX, a designated contract market regulated by the United States Commodity Futures Trading Commission (CFTC). NFX offers trading of futures contracts on foreign currencies and gold, which clear at The Options Clearing Corporation (OCC). Through International Derivatives Clearinghouse (IDCH), a division of its majority owned subsidiary International Derivatives Clearing Group (IDCG), the Company brings a centrally-cleared solution to a segment of the OTC derivatives marketplace, such as interest rate derivatives. IDCH acts as the central counterparty (CCP), for clearing interest rate swap products, which are also regulated by the CFTC. IDCH utilizes NASDAQ OMX matching, risk, and clearing technology to clear and settle interest rate derivative products.
NASDAQ OMX also engages in riskless principal trading of OTC power and gas contracts through its subsidiary NOCC. NASDAQ OMX Nordic’s operations consist of the exchanges in Stockholm (Sweden), Copenhagen (Denmark), Helsinki (Finland), and Iceland. The exchanges offer trading for cash equities and bonds, trading and clearing services for derivatives, and clearing services for resale and repurchase agreements. Trading is offered in Nordic securities, such as cash equities and depository receipts, warrants, convertibles, rights, fund units, ETFs, bonds and other interest-related products. NASDAQ OMX Stockholm and NASDAQ OMX Copenhagen also offer trading in derivatives, such as stock options and futures, index options and futures, fixed-income options and futures and stock loans. Settlement and registration of cash trading takes place in Sweden, Finland, Denmark and Iceland via the local central securities depositories.
NASDAQ OMX’s trading offering also includes cash equities listed in Norway and Norwegian derivatives products. Most of its cash equity trades on the exchanges that consist of NASDAQ OMX Nordic are centrally cleared by the European Multilateral Clearing Facility N.V. (EMCF). NASDAQ OMX Baltic operations consist of the exchanges in Tallinn (Estonia), Riga (Latvia) and Vilnius (Lithuania). As of December 31, 2012, NASDAQ OMX owned NASDAQ OMX Tallinn and has a majority ownership in NASDAQ OMX Vilnius and NASDAQ OMX Riga. In addition, NASDAQ OMX Tallinn owns the central securities depository in Estonia, NASDAQ OMX Riga owns the central securities depository in Latvia, and NASDAQ OMX Helsinki and NASDAQ OMX Vilnius jointly own the central securities depository in Lithuania.
The exchanges that consist of NASDAQ OMX Baltic offer their members trading, clearing, payment and custody services. Issuers, primarily large local companies, are offered listing and a distribution network for their securities. The securities traded are mainly cash equities, bonds and treasury bills. Clearing, payment and custody services are offered through the central securities depositories in Estonia, Latvia and Lithuania. In addition, in Estonia and Latvia, NASDAQ OMX offers registry maintenance of fund units included in obligatory pension funds, and in Estonia, NASDAQ OMX offers the maintenance of shareholder registers for listed companies. The Baltic central securities depositories offer a complete range of cross-border settlement services.
NASDAQ OMX Commodities’ offering includes the power derivatives exchange and carbon exchanges. NASDAQ OMX Commodities has 400 members across a range of energy producers and consumers, as well as financial institutions. NASDAQ OMX Commodities’ offering is designed for banks, brokers, hedge funds and other financial institutions, as well as power utilities, industrial, manufacturing and oil companies. NASDAQ OMX Commodities offers clearing services for energy derivative and carbon product contracts by serving as the CCP. In addition, NASDAQ OMX Commodities, together with Nord Pool Spot, operates N2EX, a marketplace for physical United Kingdom power contracts. The Company provides market participants with several alternatives for accessing its markets for a fee.
The Company’s United States marketplaces may be accessed via a number of different protocols. Market participants access its systems using QIX, a programming interface that provides a protocol for its users with functionality, including quotation updates, and computer-to-computer interface (CTCI) a protocol that allows market participants to enter transactions directly from their computer systems to the Company's computer systems. Firms also may use former INET protocols, such as OUCH and RASH, to access its single trading platform. The Company also earns revenues from connectivity to various market data feeds. As an alternative to a firm-developed trading front-end, its system offers the NASDAQ Workstation, an Internet-browser based interface that allows market participants to view market data and enter orders, quotes and trade reports. It also offers a range of add-on compliance tools to help firms comply with regulatory requirements.
The Company provides co-location services to market participants whereby firms may lease space for equipment within its data center. Access Services revenues also include revenues from FTEN. FTEN is a provider of real-time risk management (RTRM) solutions for the financial securities market. NASDAQ OMX earns Market Data revenues from the United States tape plans and the United States and European market data products. The NASDAQ Stock Market operates as the exclusive Securities Information Processor of the UTP Plan for the collection and dissemination of best bid and offer information and last transaction information from markets that quote and trade in NASDAQ-listed securities. The NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX PSX are participants in the UTP Plan and share in the net distribution of revenue according to the plan on the same terms as the other plan participants.
NASDAQ OMX collects processes and creates information and earn revenues as a distributor of its own, as well as select, third-party content. The Company provides varying levels of quote and trade information to market participants and to data distributors, who in turn provide subscriptions for this information. NASDAQ OMX distributes this market information to both market participants and non-participants through a number of products. The Company uses its distribution network of more than 2,000 market data distributors to deliver data regarding its market depth, index values, mutual fund valuation, order imbalances, market sentiment and other analytical data. NASDAQ OMX offers a range of data products, including NASDAQ TotalView, its flagship market depth quote product. TotalView shows subscribers quotes, orders and total anonymous interest at every price level in The NASDAQ Stock Market for NASDAQ-listed securities and data for the Opening, Closing, Halt and IPO Crosses. The Company also offers TotalView products for its NASDAQ OMX BX and NASDAQ OMX PSX markets. NASDAQ OMX also offers TotalView enterprise licenses to facilitate distribution of this data.
The Company operates several other services and data products to provide market information. NASDAQ Basic provides customers with trading data of bid and offer and last sale information. NASDAQ Last Sale provides broad based and access to last sale information via Internet portals. NASDAQ Market Replay is a replay and analysis tool that allows users to view order book and trade data for NASDAQ, NYSE- and NYSE Amex-listed securities at any point in time. NASDAQ OMX DataStore is designed to transform the market data industry through use of plug-and-play technology to deliver new information content. Mutual Fund Dissemination Service is a service that facilitates the end-of-day recap dissemination of all mutual fund pricing information and is used by data vendors and media to receive complete net asset value data on funds.
Global Index Dissemination Service is a data feed that carries the values for a number of broad-based and sector indexes and ETFs. RussellTick is a data feed that consolidates the distribution of the Russell family of indexes. Top Of PHLX Options is a top-price-level data feed directly from the NASDAQ OMX PHLX options market. MatchView is a direct data feed that provides a view of the prevailing best bid offer of other exchanges. Global Index Watch provides index weights and components, including advanced notification of corporate actions, as well as daily and historical index values for NASDAQ OMX indexes. NASDAQ Data-On-Demand is a service that gives customers instant access to historical Level 1 information. Global Access is a service that performs services for clients, such as client on-site reviews.
RapiData is a provider of machine-readable economic news to trading firms and financial institutions. The Company delivers the United States government and other economic news directly from the source to customers interested in receiving information in an electronic feed. The exchanges that consist of NASDAQ OMX Nordic and NASDAQ OMX Baltic, as well as NASDAQ OMX Commodities, offer European market data products and services. These data products and services provide market transparency to professional and non-professional investors who participate in European marketplaces and, at the same time, give investors greater insight into these markets. European market data products and services are based on the trading information from the exchanges that consists of NASDAQ OMX Nordic and NASDAQ OMX Baltic, as well as NASDAQ OMX Commodities, for four classes of assets: cash equities, bonds, derivatives and commodities. The Company provides varying levels of quote and trade information to market participants and to data distributors, who in turn provide subscriptions for this information. Revenues from European market data products are subscription-based and are generated primarily based on the number of data subscribers and distributors of its data.
NASDAQ OMX provides a range of data products. These products and services are packaged for market professionals as well as for private individuals, and include information on market depth, specific transactions and share-price trends, the compilation and calculation of reference information, such as indexes and the presentation of statistics. Nordic Equity TotalView provides full market insight into the order book, news and analysis data for all Nordic cash equities. The product also includes index values and weights and liquidity measure indicators. Nordic Derivative Level 2 provides listing details, trade information, derived information and order book information with the five levels of bid and ask prices with the respective total quantity. Nordic Fixed Income Level 2 provides listing details, order book information, bid and ask quotes for up to five levels, trade information, derived information, indicative bid and ask quotes, daily turnover statistics and company disclosures.
The Company’s Broker Services operations offer technology and customized securities administration solutions to financial participants in the Nordic market. Services primarily consist of back-office systems, which allow customers to entirely or partly outsource their company’s back-office functions. It offers customer and account registration, business registration, clearing and settlement, corporate action handling for reconciliations and reporting to authorities. Available services also include direct settlement with the Nordic central securities depositories, updating and communication via the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to deposit banks. Revenues are based on a fixed basic fee for back-office brokerage services, such as administration or licensing, maintenance and operations, and a variable portion that depends on the number of transactions completed.
The Company’s Issuer Services segment includes its Global Listing Services and Global Index Group businesses. It offers capital raising solutions to companies worldwide and has more worldwide listings - approximately 3,500 companies, as of December 31, 2011. NASDAQ OMX operates a range of listing platforms worldwide to provide multiple global capital raising solutions for private and public companies. Its main listing markets are The NASDAQ Stock Market and the exchanges that consists of NASDAQ OMX Nordic and NASDAQ OMX Baltic. The Company offers a consolidated global listing application to companies to enable them to apply for listing on The NASDAQ Stock Market and the exchanges that consists of NASDAQ OMX Nordic and NASDAQ OMX Baltic, as well as NASDAQ Dubai.
NASDAQ OMX’s Global Listing Services business includes its United States Listings, European Listings and Corporate Solutions businesses. Companies listed on The NASDAQ Stock Market represent a diverse array of industries, including health care, consumer products, telecommunication services, information technology, financial services, industrials and energy. As of December 31, 2012, the NASDAQ Stock Market had three listing tiers: The NASDAQ Global Select Market, The NASDAQ Global Market and The NASDAQ Capital Market. As of December 31, 2011, a total of 2,577 companies listed securities on The NASDAQ Stock Market, with 1,446 listings on The NASDAQ Global Select Market, 634 on The NASDAQ Global Market and 497 on The NASDAQ Capital Market.
NASDAQ OMX also offers listings on the exchanges that consist of NASDAQ OMX Nordic and NASDAQ OMX Baltic. For smaller companies and growth companies, it offers access to the financial markets through the NASDAQ OMX First North alternative marketplaces. As of December 31, 2012, a total of 754 companies listed securities on its Nordic and Baltic exchanges and NASDAQ OMX First North. The Company’s European listing customers are organizations, such as companies, funds or governments. Customers issue securities in the forms of cash equities, depository receipts, warrants, ETFs, convertibles, rights, options, bonds and fixed-income related products. During the year ended December 31, 2012, a total of 18 new companies were listed on its Nordic and Baltic exchanges and NASDAQ OMX First North.
NASDAQ OMX’s Corporate Solutions business provides customer support services, products and programs to customers, including companies listed on its exchanges. The Company offers webcasting and investor relations communication services for companies in the Nordic region through its subsidiary Zoomvision Mamato (ZVM), which is a provider of webcasting services in Northern Europe. NASDAQ OMX offers corporate communications and reputation management solutions. The Company is an index provider. NASDAQ OMX develops and licenses NASDAQ OMX branded indexes, associated derivatives and financial products as part of its Global Index Group business. It licenses cash-settled options, futures and options on futures on its indexes. In total, the Global Index Group offers over 2,600 diverse indexes. As of December 31, 2012, NASDAQ OMX indexes were the basis for over 7,000 structured products.
The Company is a technology solutions provider and partner to exchanges, clearing organizations and central securities depositories. Its technology business is also the sales channel for its complete global offering to other marketplaces. The systems solutions NASDAQ OMX offers support trading, clearing, settlement, surveillance and information dissemination for markets with wide-ranging requirements, from the markets in the United States, Europe and Asia to smaller African markets. The solutions it offers can handle all classes of assets, including cash equities, currencies, various interest-bearing securities, commodities, energy products and derivatives. NASDAQ OMX’s technology solutions are utilized by, among others, the Australian Securities Exchange, Bolsa de Valores de Colombia, Egypt Stock Exchange, Hong Kong Exchanges and Clearing, SIX Swiss Exchange, Singapore Exchanges, Tokyo Commodity Exchange, Osaka Securities Exchange and SBI Japannext.
The Company’s trading and market data solutions are utilized by exchanges, alternative-trading venues, banks and securities brokers with marketplace offerings of their own. In the post-trade stage, NASDAQ OMX offers integrated systems solutions for clearing (risk management) and settlement (settlement and delivery) of both cash equities and derivatives to clearing organizations worldwide. A central part of many projects is facility management and systems integration. NASDAQ OMX also offers operation and support for the applications, systems platforms, networks and other components included in a turn-key information technology solution. Its advisory services are designed to support its customers’ strategies. NASDAQ OMX offers broker surveillance and compliance services to its customers. The INET technology is used across NASDAQ OMX’s United States and European markets. INET is also the main building block of its Market Technology offering, Genium INET.
The Company competes with NYSE Euronext, BATS Global Markets, Direct Edge, Deutsche Borse AG, the London Stock Exchange Group plc (LSE), the Spanish Exchanges, SIX Swiss Exchange, Chi-X, BATS Europe, EuroMTS Limited, LiquidNet, Investment Technology Group, Turquoise, BATS, Markit BOAT, the Burgundy MTF, Chicago Board Options Exchange (CBOE), the International Securities Exchange (ISE), NYSE ARCA, NYSE Amex, the Boston Options Exchange (BOX), EUREX Group (EUREX), NYSE Liffe, EDX London Limited (EDX), European Multilateral Clearing Facility N.V. (EMCF), X-Clear, EuroCCP, The NASDAQ Stock Market, NASDAQ OMX Nordic, Euronext, Borsa Italiana, PLUS Markets plc, the Pink Sheets LLC, Over-the-Counter Bulletin Board (OTCBB), the Nordic Growth Market and Aktietorget.
NASDAQ OMX Group Inc
One Liberty Plaza, 165 Broadway
NEW YORK NY 10006
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