Nasdaq Eyes Opportunity as Fixed Income Slips Toward Electronic Trading

Eric Noll,NASDAQ Executive Vice President

Eric Noll,NASDAQ Executive Vice President

Julie Segal writes for Institutional Investor that Nasdaq, once known as the stock home for young technology companies, is making a bid to become a major player in the electronic trading of fixed-income securities. The move is a logical one for Nasdaq as equity trading becomes increasingly competitive and as exchanges look for new sources of revenue. On July 1, New York–based Nasdaq OMX Group completed its purchase of the eSpeed electronic trading platform for U.S. Treasuries from BGC Partners for approximately $750 million, a huge move that is one of several Nasdaq fixed-income initiatives, which also include the recent launch of the London-based NLX exchange for interest rate futures in Europe.

Eric Noll, Nasdaq executive vice president of transaction services in the U.S. and the U.K., says the exchange is piggybacking on the trend of dealers looking for electronic solutions for fixed-income trading. “Dealers are saying, ‘I have to find a much more effective way to provide liquidity to my customer,” explains Noll, pointing to the increased capital requirements being imposed on banks by new regulations. He adds that the eSpeed acquisition was also driven by Nasdaq’s belief that volume in fixed-income markets will skyrocket once central banks ultimately reverse course in monetary policy and rates rise.

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