Wherefore Art Thou, Romeo?

Pop quiz: Which Western community not only refuses to condemn forced marriages, but actively encourages them? Answer: the business community—they're just called hostile takeovers. And this may well be the route Nasdaq is forced to pursue in its courtship of the London Stock Exchange.

Last week, the LSE's management again robustly rebuffed Nasdaq's advances. However, although Nasdaq has failed to woo the exchange directly, it hopes that an appeal to LSE's parents—its shareholders—will eventually result in a union, willing or not.

Otherwise, Nasdaq is likely to continue its alternative strategy of buying up LSE stock until it has a controlling stake. Originally, observers viewed this stake, which until recently stood at 25 percent, simply as a form of engagement ring—a way to deter other potential suitors who may make advances but balk at the thought of dragging the LSE down the aisle, stalker in tow. However, by building its stake over time, Nasdaq may eventually be able to influence decision-making at the LSE to block proposals or appoint its own board members—the equivalent of the Neanderthal clubbing his prospective "bride" into submission.

This prolonged and unrequited courtship has led many to draw comic parallels with Romeo and Juliet. But the relationship may yet prove to be as dark and tumultuous as that in Shakespeare's love-struck tragedy, leaving both parties as vulnerable as their Shakespearian counterparts—Nasdaq saddled with debt, and the LSE battling for control of its business. While a willing marriage would create a transatlantic powerhouse to rival the merged NYSE-Euronext, and one with a highly efficient market data business into the bargain, would an unwelcome takeover and new regime really benefit the exchanges' business—or just the shareholders?

On to the continuing saga of two more tragic partners, HyperFeed and Exegy—who have now drawn the legal versions of their clubs—as well as news of two other vendors expected to use less drastic means to acquire business, Reuters and BT Radianz.

Sources tell us that these will provide support to HyperFeed clients over a three-month period, as detailed in last week's Inside Market Data. Both vendors declined to comment on the subject last week, but IMD understands that Reuters will maintain the data that underlies HyperFeed's ticker plant, while Radianz will provide the networking and connectivity.

Most likely, they will be making efforts to migrate clients to their own offerings during that three-month period. While HyperFeed's competitors are clamoring over its clients—who bemoan that "two perfectly good companies... have now decided to blow themselves up for no good reason"—it's worth remembering that Reuters provides its own low-latency feed offering, Reuters Data Feed Direct. It's also worth noting that three months is plenty of time for HyperFeed's clients to become familiar with Reuters and Radianz staff.

We've outlined the details of HyperFeed's lawsuit in brief on page 5, though there's one thing missing—a response from Exegy, which has not responded to our calls since they terminated the merger agreement with HyperFeed earlier this month. We hope this will change, and that Exegy will realize the importance of articulating its proposition to the industry—which it will have to do sooner or later if, as HyperFeed claims, it intends to continue with its plans to offer innovative, hardware-based ticker plants.

However, if the lawsuit is upheld, Exegy will have to do that without any of the development resources or contacts gained from HyperFeed, the sad result of which would be not one but two fewer providers in the market data industry. As the Prince of Verona sums up Shakespeare's tragedy, "All are punished."

Max Bowie