Nasdaq To Become A Public Company

The Board of Directors of The Nasdaq Stock Market, Inc. (Nasdaq®), announced today its decision to become a publicly traded company.

Nasdaq Chairman Frank G. Zarb noted, "Offering shares to the public is a natural next step in the evolution of Nasdaq. When the time is right, we will do it. The result will be a Nasdaq with more resources, better able to compete, and improve its market for investors and companies around the globe."

Following the closing of Nasdaq’s second private placement in January, a committee of the Board was formed to consider whether Nasdaq should become a publicly traded company. Today, the Board accepted the committee’s conclusion that it was in the interest of both Nasdaq’s shareholders and the investing public for Nasdaq shares to be publicly traded and widely held through an initial public offering (IPO).

The specific timing will depend on a variety of factors, notably: recognition for Nasdaq by the Securities and Exchange Commission that it meets its requirements for "exchange" status; progress on several important technology initiatives, including SuperMontageSM (Nasdaq’s next generation trading system, slated for completion in the early 2002), and; market conditions. The Nasdaq Board is expected to actively revisit the timing of an IPO in the Fall with the earliest time being sometime in 2002.

The advantages noted for a public ownership by the committee in its review included the following:

An IPO and the capital it provides will allow Nasdaq to continue to improve its market.
An IPO will allow Nasdaq to compete effectively with domestic and international competitors.
An IPO will facilitate the NASD’s sale of its remaining equity ownership.
An IPO will create a liquid acquisition currency.
An IPO will provide a valuation benchmark and liquidity for current investors.
An IPO will allow Nasdaq to control the development of the trading market for its stock.

Also commenting on today’s decision was Frank E. Baxter, Chairman of the Jefferies Group and head of the NASD Board committee that developed the original restructuring strategy and the more recent board strategic assessment of whether Nasdaq should become a public company. Baxter noted, "The process we’ve gone through to create an independent, investor-owned Nasdaq has been thoughtful and deliberative. The result is a Nasdaq that is better positioned than ever before for three major reasons. First, we have aligned the interests of the Market with the interests of key participants. Second, Nasdaq has both an initial infusion of capital and easier ongoing access to capital. Third, as a for-profit, stock-based company governed by the market’s leading participants, Nasdaq should be more agile, flexible, and effective in responding to industry and market conditions."

Background

The Nasdaq Stock Market and the NASD began formally studying the issue of governance and restructuring options in mid-1999 in the face of the challenging, dynamic and increasingly competitive market. Some of the milestones along the way have included:

Mid-1999: Baxter Committee formed to consider governance and restructuring options.
Jan. 4, 2000: NASD Board approves restructuring.
April 14, 2000: NASD membership overwhelmingly approves restructuring.
June 28, 2000: Nasdaq completes first phase of its private placement.
Jan. 24, 2001: A second Baxter Committee formed to evaluate the merits of Nasdaq becoming a public company and issuing an IPO.
Jan. 25, 2001: Nasdaq completes second phase of its private placement.
March 28, 2001: Hellman & Friedman invests $240 million in Nasdaq.
April 26, 2001: Nasdaq Board decides to become a public company.
2002 ?: Possible date for an initial public offering

The Nasdaq Stock Market lists nearly 4,600 companies, has a larger dollar volume, and trades more shares per day than any other U.S. market. For more information about Nasdaq, visit the Nasdaq Web site at www.nasdaq.com or the Nasdaq NewsroomSM at www.nasdaqnews.com.