Leveraging technology to add new products like intra-day cross. Will compete with others like LiquidNet but be more open and transparent.
Only 30% of revenues comes from transactions and 70% comes from fees. Listing, data products, indicies, access services and so on.
Regulation NMS goes into effect in 2007. Forces best price execution among electronic exchanges. Electronic trading begs the question of what listing services really means. NASDAQ now is focused on value added services like D&O insurance (without underwriting risk). One company that pays $95K a year for the listing paid $160K for an insurance package. Other services include news distribution that competes with companies like Dow Jones.
Options trading is another potential growth area that could leverage their cash equity technology. As markets get more Global they feel they can expand there as well.
Technology has evolved from 2001. Transaction speed has improved to sub-1 millisecond from 1 second. Peak rates have grown from 1,000 TPS to 64,000 TPS (or about 10x daily volume.)
NASDAQ now has the ability to trade any US listed equity including all those on the NYSE and AMEX. With Regulation NMS they will be on a more level playing field with the NYSE.
Volumes are growing. Now 5B shares/day between the NASDAQ and NYSE. As trading goes electronic it tends to drive more volume.
The company has one some major listings from NYSE including United Airlines, Sears, Walgreens, Cadence, and so forth. Trying to shift the focus from the brand of the exchange to the range of services delivered for price.
Gross margin has been expanding at 31% with operating expenses creeping up just 4% leading to a major expansion in operating margin to nearly 40% in the most recent quarter.
They feel that the combination with the LSE is a remarkably good fit because the businesses are so similar. They stand by the price offered as being full and fair. That they will continue to support the LSE market structure.
Basically said the few market share points they lost will come back and potentially a bit more. Proposes that with electonic trading the majority of shares traded will not touch the traditional specialist on the floor of the NYSE.