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Nasdaq mulls Net platform
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July 28, 1999: 3:51 p.m. ET
Exchange considers partnerships, restructuring in face of new competition
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NEW YORK (CNNfn) - The Nasdaq stock market is considering a restructuring that would include an Internet platform for trading shares, in an effort to stay ahead in a new competitive landscape, a spokesman said Wednesday.
The interest in the Internet is part of a larger strategy to cement Nasdaq's position as the dominant market for technology shares, said Andrew Macmillan, the Nasdaq spokesman.
The cornerstone of that strategy -- which Nasdaq has been developing for 10 months -- is to develop a new ownership structure for the market, making it a stock-based, for-profit market owned largely by key Nasdaq participants, Macmillan said.
That new ownership strategy likely would lead to an initial public offering, Macmillan added.
The new structure would serve two purposes: Nasdaq would be able to raise money for possible new investments, and it would lock in large market participants to protect Nasdaq against the flood of electronic communications networks (ECNs), or electronic stock trading systems, which are emerging as potential competitors.
ECNs, such as Instinet and Archipelago, handle approximately 30 percent of Nasdaq volume on any given day.
Anurag Pandit, portfolio manager at John Hancock's small-cap growth team, said while such a move isn't crucial to the market's future success, Nasdaq is wise to change along with the rest of the industry.
"We've already seen alternate trading forms gaining share over the traditional systems," he said. "It makes a lot of sense to be proactive in making changes. Charles Schwab (SCH) didn't need to go into online trading to survive, but they saw where the market was going and were smart in being proactive in making the move."
The new Nasdaq system would augment, rather than replace, its existing computer-based system. The Internet-based system would allow smaller brokers easier and cheaper access to Nasdaq trades.
The plan comes at a time of considerable upheaval among stock exchanges. Along with Nasdaq, the New York Stock Exchange is considering becoming a publicly traded company.
On Tuesday, Archipelago announced it is set to ask for regulatory approval to become a full-fledged stock exchange.
The Nasdaq board of directors meets in New York Thursday. 
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