Nasdaq, Börse Dubai Enter OMX Pact

Under the agreement, still subject to a number of conditions, Borse Dubai will buy 19.9 percent of Nasdaq and 28 percent of the outstanding share capital of the London Stock Exchange (LSE) from Nasdaq. In turn, Nasdaq has agreed to acquire all the OMX shares owned by Borse Dubai, which is the holding company for the Dubai Financial Market (DFM) and the Dubai International Financial Exchange (DIFX).

OMX officials say there are no immediate plans to integrate the various exchanges. "We're a company on our own, and we will continue to promote both the trade on the Nordic exchanges as well as the technology business ... and we will do that without thinking about potential mergers until there's actually a merger," says OMX CEO Magnus Böcker.

"Taken together, these strategic actions will provide us with a footprint unlike any other exchange, creating a global exchange leader, with operations in key markets around the world," says Bob Greifeld, president and CEO of Nasdaq, in a statement. "On the closing of the transactions with Borse Dubai, and completion of the proposed combination with OMX, we will have the technological infrastructure and the financial strength to serve our customers and to achieve our global ambitions," he adds.

"By entering into this partnership with Nasdaq, we will benefit from Nasdaq's world-leading brand, technology and platform. In addition, this combination will establish a gateway to large pools of liquidity," says Essa Kazim, chair of Borse Dubai, in a statement.

The suggested combination is a way for OMX to bring forward lower costs and attract international members trading at the exchanges, says OMX's Böcker. "By standing alone, OMX will not increase efficiency and liquidity in the market, so the board has, for quite some time, been looking for several alternatives to find the next step," adds Urban Bäckström, chairman of OMX.

This agreement shows that Dubai wants to be a player in the global securities exchanges business, says Larry Tabb, founder and CEO of industry research firm Tabb Group. "There may be a lot said to question the validity of this decision; however, the race to develop the global exchange is certainly apparent and NYSE Euronext is a step, or three, in the lead," he says.

The exchanges won't be discussing potential integrations at this early stage, concludes Tabb. "These are only minority ownerships," he adds.

There will be more acquisitions between the exchanges, says Tabb. "This agreement is not the endgame. The endgame is that eventually either Dubai buys both Nasdaq and the London Stock Exchange or one of these exchanges winds up the parent and creates an effective competitor to NYSE Euronext," he says.