Nasdaq Expands Its Global Footprint By Acquiring Norwegian Clearing House

July 2nd, 2012 by Trefis Team
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Nasdaq OMX (NASDAQ:NDAQ) completed the acquisition of NOS Clearing ASA, a Norwegian freight, energy and seafood clearing house, which will be integrated into NASDAQ OMX Stockholm AB. [1] The deal is in-line with the company’s policy for global expansion and comes just a few days after Nasdaq launched its third stock-options market in the U.S. (See Nasdaq Launches Another Options Exchange in The U.S.). The company also plans to launch a new interest-rate derivatives trading platform in London (See Futures Exchanges Talk Derivatives Reforms While Europe Burns).

See our full analysis of Nasdaq OMX

The acquisition will allow Nasdaq to capitalize on the emerging seafood derivatives market, with support from its cross-market technology platform, Genium INET. Despite the economic uncertainty in the region, the European derivatives market is in good stead, with effective legislative measures applied by the authorities to ensure healthy competition and growth. The company will also enter the freight derivatives market, which is once again finding its feet after the financial crisis of 2008. [2]

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Investors are drawn to derivatives as they offer higher returns than traditional cash products, particularly in volatile market conditions. Options trading volumes rose by 26% in 2010 and by 12% in 2011, and we expect the growth trend to continue through our forecast period. [3]

European cash and options trading currently accounts for 2% of our price estimate for Nasdaq’s stock, but we expect the average daily Nasdaq OMX derivative contracts in the region to grow steadily, fueled by the company’s initiates and acquisitions.

Our price estimate of $27 on Nasdaq OMX’s stock is about 15% above the current market price. The company came under scrutiny in recent months after the Facebook (NASDAQ:FB) IPO saga, but we maintain a positive outlook as we expect investor confidence to recover once the dust has settled down.

You can modify the interactive chart above to gauge the effect of a change in forecast on our price estimate.

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Notes:
  1. Nasdaq OMX closes NOS Clearing acquisition, 2nd July, 2012 [↩]
  2. Slow recovery likely for freight derivatives amid low market rates, risk.net [↩]
  3. Volume Climbs 11.4% to 25 Billion Contracts Worldwide, Futures Industry Report [↩]