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We’re No. 3!
Nasdaq is likely to get bumped from being the second-largest stock exchange in the world after two smaller rivals merge.
The planned combination of BATS Global Markets and Direct Edge will oust Nasdaq from its ranking as the second-largest exchange, behind just NYSE Euronext.
It’s another blow to Nasdaq CEO Bob Greifeld, still reeling from the technological meltdown last week that forced his exchange to close for three hours.
BATS and Direct Edge’s market share would total about 21 percent.
NYSE Euronext controls 23 percent and Nasdaq about an 18 percent market share.
At the very least, the potential merger adds another rival for Nasdaq in the fiercely competitive business of listing companies’ shares on public exchanges.
BATS and Direct Edge yesterday announced that the deal is slated to be completed in the first half of next year with BATS CEO Joe Ratterman acting as CEO of the combined platform.
The merger comes as volumes in trading stocks for all exchanges have been steadily evaporating, forcing the managements to morph into cost-cutters to keep profits from sagging.
That equity-trading decline has also forced exchanges to weigh mergers.
For example, the NYSE is in the midst of wrapping up a merger with the IntercontinentalExchange.
Greifeld has struggled to find a partner for Nasdaq — even at one point trying to interpose it in NYSE’s failed merger with Deutsche Börse last year.
Now, Nasdaq is forced to focus on getting its house in order following the three-hour freeze amid the changing Wall Street exchange landscape.
Greifeld has said that Nasdaq needs to improve its “defensive driving” in order to avoid similar computer pratfalls, pointing to problems communicating with NYSE’s Arca system as a possible trigger for its own long trading snafu.