- The Washington Times - Wednesday, February 15, 2006


Nasdaq Stock Market Inc., the 35-year-old electronic equity market, will challenge the New York Stock Exchange by introducing a listing tier for companies that meet the highest standards.

Nasdaq will group the 2,650 companies that are listed on the National Market in two sections as of July 1, the company said. About 1,000 companies will qualify for the Global Select Market, including the top 100 nonfinancial companies by market value, which are in the Nasdaq-100 Index. The rest will be listed in the Global Market.

“It is a way of identifying the fact that Nasdaq currently has blue-chip companies, but more importantly, it’s about creating a race to the top on regulation,” said Chief Executive Officer Robert Greifeld in New York. “We believe that companies will want to be associated with the highest governance standards that exist.”

The move is designed to win business from the 213-year-old NYSE, which historically has had the toughest listing requirements among U.S. equity exchanges. Nasdaq’s new tier would have higher standards than those at other exchanges, including bourses in London and Frankfurt, Mr. Greifeld said.

Listing fees accounted for about a quarter of the exchanges’ revenue last year. They also collect transaction and market data fees for the majority of trades done in their listed companies.

Nasdaq will not adjust its listings fee with this new tier, Mr. Greifeld said.

Nasdaq, which once sought international listings by creating exchanges in Europe and Japan, and the Big Board are vying for non-U.S. companies that want to draw investors by meeting the highest financial standards. Nasdaq’s Global Select tier will require members to have an average market value of at least $850 million and three-year pretax earnings of more than $11 million.

An initial listing on Nasdaq traditionally had required a market value of at least $8 million and pretax earnings of $1 million. The NYSE required a market value of at least $60 million and three-year pretax earnings of $10 million.

“Based on what we’ve heard, the new Nasdaq requirements seek to imitate for a small group the listing standards that apply to all of the more than 2,750 NYSE-listed companies,” said Richard Adamonis, a spokesman for the NYSE. “The NYSE’s higher standards benefit all issuers and investors.”

Nasdaq’s move runs against the Big Board’s plan to add a lower tier for listings with its merger with Archipelago Holdings Inc. The deal, which is expected to be completed this quarter, will give the NYSE a listing venue for companies that don’t meet its requirements and traditionally would have gone public on Nasdaq.

Companies with an NYSE or Nasdaq listing had a 14 percent higher valuation than those that listed their stock only on their domestic exchange, according to a study last year by finance professors G. Andrew Karolyi and Rene Stulz, of the Ohio State University, and Craig Doidge, of the University of Toronto.

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