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According to sources, Greifeld is eyeing LCH.Clearnet (formally known as the London Clearing House), a derivatives clearing broker, in an attempt to cash in on new regulations that require the clearing of interest rate swaps, people with knowledge of the matter tell FOX Business.
A Nasdaq spokesman wouldn’t deny the matter.
The estimated price tag of such a deal would be around $500 million, and Nasdaq would be tapping into a potentially growing new business of clearing interest-rate swaps. Clearing houses play an important function in the markets in that they guarantee that counter-parties on trades get paid for transactions.
Under the Dodd-Frank financial reform bill, as well as other post-financial crisis regulations, clearing brokers would play an even greater role in the markets as regulators force traders to send their trades through places like LCH.
But such a deal would pale in comparison to the blockbuster effort to take over the Big Board, and it doesn’t solve a bigger problem for Greifeld and the Nasdaq: how to grow substantially without being taken over, something Greifeld has indicated he wants to avoid. The most obvious deals would involve hookups with the London Stock Exchange or the Singapore Stock Exchange, but those deals would mean he'd be out of the top job given Nasdaq's smaller size, and Nasdaq would be taken over by a larger entity.
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Bankers tell FOX Business that Greifeld is not likely to be interested in a job that would leave him as second in command, at least not yet, as the Nasdaq’s board has so far given its approval to his strategy of keeping Nasdaq independent.
Meanwhile, even if smaller deals like the LHC may be in the offing, those transactions wouldn't be the transformative combinations that Nasdaq needs to stay competitive.
That leaves Nasdaq shareholders in the unenviable position of having a CEO who wants to do incremental deals to keep his job -- deals that won't necessarily increase shareholder value substantially -- when in fact it may make more sense for the company to sell itself altogether, bankers say.
“Bob is a tough guy who wants to run the show,” said one investment banker. “But at some point it might not be his choice given Nasdaq’s size.”