And now, global Nasdaq by end of 2001

And despite major regulatory hurdles, Hilley, Global Nasdaq’s chief engineer, envisions the idea morphing into reality within 18 months. The goal: an Internet-based, global electronic stock exchange where the most liquid stocks would slosh around the world, traded by European, Asian and US retail investors.

"What we hope to achieve here is to create a situation anywhere in the world, you can instantly get information off the Internet and trade on that day instantaneously," Hilley told Reuters in an interview on Friday. "So what you will have is a 24-hour, seamless trading platform any time, anywhere."

Hilley was in London earlier in the week wrapping up talks on a deal that ensured Nasdaq would play a role in the merger of the London Stock Exchange and the Deutsche Boerse. The historic merger between the two bourses, a deal announced Wednesday, will create Europe’s largest stock market.

As part of the deal, Nasdaq will run a sub-market of the newly merged Anglo-German bourse that will absorb the Deutsche Boerse’s Neuer Markt and London’s techMark, where about 400 high-growth European companies have listed their shares. The new Frankfurt-based "Nasdaq iX," will be 50 per cent owned by "iX" – the newly merged market whose name stands for International Exchanges. Nasdaq and its partners will own the other half.

Nasdaq will launch Nasdaq iX by the end of 2000, or at the latest, in early 2001, Hilley said. US Nasdaq-listed blue chips stocks should also be listed on Nasdaq iX, making it possible for European investors to buy stocks directly from brokers. Europeans can buy US stocks, but it is an expensive, drawn-out process for retail investors, Hilley said.

On the Asian front, Hilley said Nasdaq is set to launch its sibling market, Nasdaq Japan, on June 19 as a sub-market of the Osaka Stock Exchange. Nasdaq will host a huge bash to celebrate in Tokyo. The market, though, will only have a handful of Japanese companies trading at the time of the launch. The goal is to add 10 new listings a month. By the end of the year, investors in Japan should be able to buy and sell US Nasdaq blue chips, Hilley said.

Each US company must file with Japan’s regulators to list a stock on the market in the country. "Unfortunately you have to go through this complicated process, but I would like to get a nice charter group of about 10 Nasdaq blue chips listed there in the next five months," he said. "The Japanese can invest in Nasdaq blue chips now, but it is all institutional for the most part."

In addition to Japan and Europe, Nasdaq says seven heavily traded US Nasdaq stocks will be listed on the Hang Seng Index by the end of the month. It is building Nasdaq Canada with the government of Quebec and seeking to cut a similar deal in South Korea. The main obstacle to the vision of a seamless global Nasdaq is the US Securities and Exchange Commission, Hilley said.

"The SEC is very protective in the right sense of the word, with American investors," Hilley said. Stocks open to them have to rise to SEC disclosure and accounting standards, he said.

Any European or Japanese firm seeking to trade on a US market, Nasdaq in this case, would have to apply with the SEC to trade as an ordinary share or as an American Depository Receipt (ADR), an equity product whose underlying value is tied to the share of the overseas stock. Nasdaq, to usher the regulatory process along, will advise companies in regard to their SEC applications, Hilley said.

Companies would want to be listed on the global Nasdaq because it would widen their pool of potential investors many times over, making it easier to raise capital. "This will be a whole new world of choice," he added.