02 February 2007

Nasdaq cosies up to Turquoise banks

Nasdaq chief executive Bob Greifeld is threatening to work with the seven investment banks behind the rival Project Turquoise trading platform if he is not successful in gaining the hand of the London Stock Exchange.

Mr Greifeld, entering the last 10 days of his £2.7bn battle for the LSE, admitted he and his senior management team have met with the Turquoise banks, which include Goldman Sachs and Merrill Lynch.

'My senior people had a meeting with them last week,' admitted Mr Greifeld, on a whistle-stop trip to London which saw him depart with hours of arriving.

It is known there have been a number of meetings between Nasdaq and Turquoise over the past few months, the most recently being earlier this week. Initial discussions focused on Nasdaq providing the technology for Turquoise, but it is clear Nasdaq could offer far more than systems.

Asked if he would work with Turquoise were Nasdaq's LSE bid to lapse, Mr Greifeld responded: 'Yes, I would consider that.'

His comments are aimed at making sure investors in the LSE realise the seriousness of the threat from rival exchanges such as Turqoise, which will spring up from November of this year as a result of the EU's Markets in Financial Instruments Directive (MiFID).

MiFID allows for the creation of multi-trading facilities (MTFs), that allow domestic deals to be done on rival trading platforms.

Although Mr Greifeld will not publicly admit defeat in the battle for control of the LSE – 'I don't know if we're going to win' – much of his comments during a half-hour conversation with The Daily Telegraph focused on life beyond the bid.

Notably, he believes it is only when MTFs appear that the real value of the LSE will become evident. 'If MiFID comes into effect in November, then at some time in 2008 we will have a fuller perspective on the value of the exchange,' he said.

But he went on to say that if Nasdaq's £12.43-a-share offer lapses, he will not necessarily hang on to its 28.75pc stake in the LSE.

'If there is a strategic option to shed some or all of the stake, then we will do that.'

In a wide-ranging discussion, he touched on a number of topical recent events in the sector, saying that New York Stock Exchange chief John Thain's comments were 'triggered by jealousy' while admitting he was 'surprised' by the frosty reception from the LSE board.

And while being keen not to admit defeat yet, when asked if Samuel Heyman, the LSE's second largest shareholder with a 10.7pc stake, is going to back him, he responded: 'I don't think so, no.'

'We've met with him and discussed the situation. There is no reason to hook up with him again,' said Mr Greifeld, who today begins his final tour of LSE shareholders. But he believes the race for the LSE is not yet over. 'People are not going to make final decisions until they have to. They are now focusing on the fundamental aspects of the bid. That is to our advantage.'

Investors have until Saturday, February 10, to accept the Nasdaq bid for the LSE, whose shares closed down 1p at £12.99.

© Graham Bishop