Analysts Weigh in on Nasdaq-BSE Acquisition

Analysts are weighing in with their opinions on Nasdaq's acquisition of the Boston Stock Exchange for about $61 million, announced earlier this week. While many of us were still digesting Nasdaq's transactions with Sweden's OMX AB, Borse Dubai as well as the unwinding of its position in the London Stock Exchange, Nasdaq announced a second deal on the domestic front.Brad Bailey, senior analyst at Aite Group, offered the following on the deal: "Nasdaq, not satisfied with Dubai, Sweden and London, has announced it will acquire the Boston Stock Exchange. This acquisition will give Nasdaq a second equity license, a clearing license, access to Tape B, and a second options license. It will allow Nasdaq to cut costs and increase market data revenue and possibly increase its market share by one to four percent."

Meanwhile, Dushyant Shahrawat, research director in TowerGroup's Investment Management Practice, comments, "Nasdaq's acquisition of the Boston Stock Exchange is yet another development in the great exchange liquidity land grab with exchanges fighting to buy-out smaller liquidity venues before they are snapped up by their competition. This brings the stock exchange consolidation game into the regional market with more established players buying regional players," he continues. TowerGroup's exchange expert also predicts that Nasdaq's purchase of BSE will provoke a response from its competition (i.e. NYSE), to acquire other regionals like Chicago, Philadelphia and National Stock Exchange.

Shahrawat cautions, "Regional exchanges are now faced with many challenges, Specifically they no longer have liquidity, brand cache or technological budgets to Rival that of the national exchanges." Their three main sources of traditional revenues, data, listing fees and clearing/settlement fees are under pressure, says the analyst. "Exchanges are focusing on new revenue sources outside their bailiwick including OTC clearing," he writes.Analysts are weighing in with their opinions on Nasdaqs' acquisition of the Boston Stock Exchange for about $61 million, announced earlier this week. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio