As Wall Street’s attention turns to the fading New York Stock Exchange merger with Germany’s Deutsche Boerse, Nasdaq chief Bob Greifeld is quietly plotting his next moves, including a consolidation of power at the stock market and a possible future deal with a foreign player, the FOX Business Network has learned.
Last year was a rough one for Greifeld, with his arch rival NYSE snaring more IPOs than the Nasdaq, and the embarrassment of having the US Justice Department block his attempt to launch a hostile takeover of the Big Board.
But with UK regulators now blocking the NYSE-Deutsche Boerse merger (a final decision is due by February), Greifeld is back on the offensive, people close to him say.
One major move that he is eyeing involves assuming the role of Nasdaq chairman currently held by H. Furlong Baldwin. The other: Growing the Nasdaq through a possible acquisition of the London Stock Exchange, these people say.
A spokesman for Greifeld had no comment, though he wouldn’t deny that buying the LSE is clearly on Greifeld’s agenda, as is his taking great control of the Nasdaq’s corporate leadership.
Taking over as chairman and remaining as CEO would certainly raise corporate governance issues, since most exchanges split the role with a chairman overseeing the activities of the CEO, who runs the day-to-day operations. It would also show that Greifeld is clearly looking to consolidate power.
Baldwin, the retired CEO of Mercantile Bancshares Corp., isn’t known as a major force inside the Nasdaq, but senior board member Lon Gorman is, and Gorman has butted heads with Greifeld in the past. People close to the Nasdaq say that Gorman, the former vice chairman of Charles Schwab Corp., is eyeing the Nasdaq chairman slot as well, so by taking both jobs, Greifeld would blunt Gorman’s growing influence at the exchange.
In terms of a Nasdaq-LSE hookup, it’s still unclear if the two sides could come to terms on a deal, and if such a deal might happen anytime soon. People close to the Nasdaq say that executives at both exchanges have made contact in recent months, but the LSE is currently bidding for the London Clearing House, making a Nasdaq merger difficult to pull off at least for now.
Another sticking point would be control; Greifeld would likely have to give up significant management power to the similarly-sized LSE if the two sides could agree on terms. Greifeld has expressed unwillingness to accede this type of power in the past.
But observers say the move to take the chairman spot could also signal that Greifeld is ready to compromise on his power for the sake of a deal that gives the Nasdaq a strong hand in competing with the larger NYSE.
If Greifeld gives up the CEO post and remains chairman, “this could facilitate future exchange transaction where there might be conflicts over who would take the CEO role,” said Richard Repetto, an analyst at Sandler O’Neill & Partners.
People with knowledge of the global exchange business say regulators are more likely to approve a Nasdaq-LSE merger because the combination might not run afoul of antitrust laws.
European Union regulators are concerned that the NYSE-Deutsche Boerse combination would give the new entity a stranglehold on the global derivatives business, while US regulators worried that a NYSE-Nasdaq deal would have given the combined market an unfair advantage in the stock trading and stock listing arenas.
“Greifeld is clearly up to something, and the problem the NYSE is having with the Deutsche Boerse is clearly giving him confidence about making his next move,” said one person with direct knowledge of the Nasdaq’s activities.
Charles Gasparino joined FOX Business Network (FBN) in February 2010 as Senior Correspondent.