Red hot IPO market adds fire to NYSE, Nasdaq rivalry

A surging market for initial public offerings has intensified competition between the two largest US stock exchanges for new listings

A surging market for initial public offerings (IPOs) has intensified competition between the two largest US stock exchanges for new listings, with both markets campaigning for many of the companies that have recently gone public. The New York Stock Exchange (NYSE) and Nasdaq Stock Market Inc have stepped up the wooing process as a spate of higher-profile deals worth more than $1 billion have raised the stakes.

“You can look at any of the recent IPOs that came to our market and pretty much take for granted there was a competition,” said Noreen Culhane, an executive vice president at NYSE Euronext , which owns NYSE. The exchanges have differing approaches. NYSE sells its market to companies on stringent listings standards, higher visibility and its “hybrid” model combining floor traders with electronic trading.

Nasdaq touts lower listings fees, the efficiency of an all-electronic market and various nontrading services for issuer companies, from Web casting to insurance. It also holds IPO “boot camps” for companies wishing to go public. Morningstar Inc analyst Patrick O’Shaughnessy said NYSE’s reputation as the “Cadillac of all exchanges” has helped it win some big IPOs recently, but Nasdaq’s strategy of providing additional client services may be slicing into that advantage.

The NYSE has no plans to start nontrading services, said Culhane. Nasdaq Executive Vice President Bruce Aust said his company wants to “gets in front of every IPO out there” to make a pitch. “We compete for all the biggest deals … but you win some, you lose some,” he said in response to a question about whether Nasdaq fought to win the IPO for private equity giant Blackstone Group, the biggest US IPO in five years. Blackstone raised $4.13 billion in its NYSE debut last month. Nasdaq’s biggest IPO this year was Interactive Brokers Group, which raised $1.2 billion.

Nasdaq is enjoying its best IPO year since 2000, Chief Executive Robert Greifeld told analysts during an earnings call last week. There were 135 IPOs on US exchanges in the first half of 2007, raising more than $33 billion, compared with 105 IPOs that raised about $23 billion a year ago, according to PWC. Since 2003, when 88 IPOs raised a total of $18.3 billion, IPO volumes and proceeds have grown every year.