The missing link (page 1 of 3)

By Martha Slud in New York

Last summer, a group of about 30 senior executives from stock markets throughout the Middle East gathered in New York to discuss the possibility of linking their fledgling markets to the electronically traded Nasdaq, a technology-heavy exchange that has stolen the thunder from the more staid New York Stock Exchange.

Is the idea far-fetched? It may be, financial experts say. But they also say that some sort of system in which Middle Eastern bourses are linked individually or together to a global exchange, such as the Nasdaq market, is a sound idea that could offer major positives for the region's economy. A cross-border equities trading arrangement could help boost liquidity in regional bourses - a key for emerging markets trying to increase trading in their shares - by helping encourage and simplify participation by foreign investors. Such a system could give investors throughout the Middle East easier access to shares of high-profile American technology firms traded on the Nasdaq, such as the software maker Microsoft, the semiconductor firm Intel or Yahoo!, the Internet search engine company.

Nasdaq, a subsidiary of the National Association of Securities Dealers Inc. (NASD), lists about 5,000 companies, including most of the technology-related startups that hold highly anticipated initial public offerings on Wall Street. The exchange has a larger dollar volume and trades more shares each day than the New York Stock Exchange, and recently opened a flashy market site in New York's Times Square - a clear sign of its coming of age.

First steps. The two-day, Nasdaq-sponsored talks in July did not result in any concrete plans, but officials say the exploratory gathering represented a first step toward potential cooperation between the US exchange and Middle Eastern markets. The meeting, hosted by Frank G. Zarb, Nasdaq's chairman and CEO, gathered representatives of the bourses in Cairo, Kuwait, Amman, Istanbul, Dubai, Athens, Palestine, Tel Aviv and elsewhere to discuss their market practices and strengths. The idea of Nasdaq linkage with the Middle East is one that seems to particularly appeal to the internationally oriented Zarb, who began looking into the potential of such a cross-border initiative during a visit to the region several months earlier.

The purpose of the July meeting "was for information sharing and to discuss each market's concerns, needs and visions for the future, both within their countries and as a player in what is becoming a more global marketplace," said Judith Inosanto, a Nasdaq spokeswoman in New York.

Nasdaq's global vision is to provide an opportunity for investors to trade any stock, at any time, from anywhere in the world. We are committed to making the goal of a seamless, 24-hour, global market a reality," she said. "As with any business or long-range visions, these things take time. We are looking at the opportunities that present themselves around the word, assess the stages they are in, analyze what makes the most sense and determine the best ways to move forward."

A Middle Eastern marketplace would not be Nasdaq's first foray abroad. The NASD, the exchange's parent company, is aggressively pursuing overseas opportunities, and in June launched Nasdaq Japan together with Internet investment firm Softbank. The new market, a division of the Osaka Securities Exchange, is designed as a venue for young Japanese companies to raise capital by tapping into the US investment community. After its first three months of operation, the Japanese Nasdaq exchange said it had listed 30 companies, compared with only 18 companies listed on the comparable "Mothers" market operated by the Tokyo stock exchange.