Nasdaq teams up with leading banks to challenge Deutsche Borse

Nasdaq, the American stock exchange, yesterday set out its latest plans to establish a European foothold, teaming up with two leading banks to challenge Deutsche Börse's near monopoly in German share trading.

Nasdaq's initiative comes after failed attempts to capture some of Europe's securities trading business through its Nasdaq Europe operation, and before that as part of the iX merger between the London Stock Exchange and Deutsche Börse.

Nasdaq Deutschland – the new venture with Commerzbank and Dresdner Bank – comes as Europe's banks and bourses vie to cut trading costs and remodel a still-fragmented industry.

Commerzbank and Dresdner will carry out some of their share trading through Nasdaq Deutschland but the new market will still have its work cut out to attract business from Deutsche Börse, which handles 90 per cent of Germany's stock market business. "Clients want the best conditions and it remains to be seen if Nasdaq's system is better than (Deutsche Börse's) Xetra," Johannes Thormann, an analyst at WestLB Panmure in Düsseldorf, said, adding that the decisive factor will be the liquidity, or volume of business, on the new platform.

Nasdaq, the world's second-largest stock exchange, will own 50 per cent of the new exchange, while Commerzbank and its online brokerage business comdirect bank will each hold 7.5 per cent and Dresdner Bank 15 per cent. The Berlin and Bremen bourses will each hold 10 per cent.

Nasdaq said it was open to new partners for the bourse venture and Germany's second-largest bank, HVB Groupsaid it was still in talks with the parties involved in the venture. It said it was open about when a decision regarding its participation would be made.

A spokeswoman for Deutsche Börse said the Frankfurt-based exchange was convinced its services were superior to those promised by Nasdaq Deutschland.