By James Langton

(April 26 – 16:00 ET) – Nasdaq’s board of directors has decided to take the exchange public. The IPO won’t likely hit the market before 2002.

Following the closing of Nasdaq’s second private placement in January, a committee of the board was formed to consider whether Nasdaq should become a publicly traded company. Today, the board accepted the committee’s conclusion that it was in the interest of both Nasdaq’s shareholders and the investing public for Nasdaq shares to be publicly traded and widely held through an initial public offering.

The specific timing of a Nasdaq IPO will depend on a variety of factors, including:

  • recognition for Nasdaq by the Securities and Exchange Commission that it meets its requirements for “exchange” status;
  • progress on several important technology initiatives, including SuperMontage (Nasdaq’s next generation trading system, slated for completion in the early 2002); and
  • market conditions.

Nasdaq’s board is expected to actively revisit the timing of an IPO in the fall with the earliest time being sometime in 2002.

The exchange cites several advantages to public ownership. It says the added capital will allow Nasdaq to continue to improve its market, and will allow it to compete effectively with domestic and international competitors. It will also facilitate the NASD’s sale of its remaining equity ownership in the exchange.

Nasdaq chairman Frank Zarb noted, “Offering shares to the public is a natural next step in the evolution of Nasdaq. When the time is right, we will do it. The result will be a Nasdaq with more resources, better able to compete, and improve its market for investors and companies around the globe.”

Frank Baxter is head of the NASD Board committee that developed the original restructuring strategy and the more recent board strategic assessment of whether Nasdaq should become a public company. He noted, “The process we’ve gone through to create an independent, investor-owned Nasdaq has been thoughtful and deliberative. The result is a Nasdaq that is better positioned than ever before for three major reasons. First, we have aligned the interests of the Market with the interests of key participants. Second, Nasdaq has both an initial infusion of capital and easier ongoing access to capital. Third, as a for-profit, stock-based company governed by the market’s leading participants, Nasdaq should be more agile, flexible, and effective in responding to industry and market conditions.”