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Turning your business
inside out… safely.
Gregor BailarCIO & EVP of Operations
Nasdaq Stock Market, Inc.
May 2001
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• Built on Technology • Competing Daily for Business• Riding Incredible Growth• Continually re-inventing our self• Creating a Global Brand
A Perpetual Start-upA Perpetual Start-up
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• Opened in 1971• World’s First Electronic Stock Market• Largest Stock Market in the USA• Over $20 Trillion traded in 2000• $70 to 115 Billion traded daily• Lists 4,829 Companies and 5210
Issues• Over 600 Companies over $1 Billion• Regularly Handles 2 Billion Shares
• Opened in 1971• World’s First Electronic Stock Market• Largest Stock Market in the USA• Over $20 Trillion traded in 2000• $70 to 115 Billion traded daily• Lists 4,829 Companies and 5210
Issues• Over 600 Companies over $1 Billion• Regularly Handles 2 Billion Shares
The Nasdaq Stock Market, Inc.
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Nasdaq’s Dollar Volume Ranks #1 in the World.
Values in Billions YTD for 2000 as of Sept. 2000
0
2000
4000
6000
8000
10000
12000
14000
16000
Nasdaq NYSE London Paris Tokyo Germany
World’s Leading Stock Markets
$15.5 Trillion
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Percentage Change in Dollar Volume of the Major Markets, 1990 - 1999
515% 475%
171%
NYSENasdaq London TokyoDeutsche
14%
Source: International Federation of Stock Exchanges (FIBV) As of 11/30/99
Dollar Volume Growth
1876%
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Source: CommScan LLC and Securities Data Company. As of 12/31/99, excludes closed-end funds.
Total Number of IPOs
287
484
397
19 14 11
7349 48
0
100
200
300
400
500
1998 1999 20001998 1999
Nasdaq
NYSE
Amex
2000
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1998
A little history…
1999 2000 2001
700 MSD
2.881 BSD April 4
1760 MSD
200120001997
1.34 BSD Oct 28
500 MSD
1998
1054 MSD
2300 MSD
3.18 BSD Jan 3
3.19 BSD April 18
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Nasdaq Operating Statistics
• World’s Largest Real-time Network 7,500+ Screens• Retail & Commercial Data Subscribers500,000+
Subscribers• Peak Daily Share Volume 3.19 Billion• Average Daily Share Volume (YTD) 2.0 Billion• Simultaneous Price Discovery <180 msec• Peak Transaction Rate 4000+ TPS• Peak Daily Page Views 12+ Million• Annual Technology Spend (2001) $500+ Million• Production System Upgrades 232+ Releases
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Trading Network TopographyConnectivity Points
of PresenceCanada
Rockville
Trumbull
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Nasdaq Domestic Technology Centers
Backup site for market systemsPrimary site for post-trade, Web-site systems30,000 sq ft Data Center300 technologists
Primary site for market systemsBackup site for post-trade, Web-site systems75,000 sq ft Data Center550 technologists3 buildings
Nasdaq Market Site operationsTier III SWAT Team 2500 sq ft Data Center15 technologists2 locations (Wall Street and Times Square)
RockvilleMaryland
TrumbullConnecticut
New York
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Nasdaq Market Systems
Quotation
Execution
Trade Reporting
Computer to
ComputerLinks
Quote and Trade Data
VendorsOrders
Trade
Market Surveillance
Quote Data
Trade Data
QuoteBroker Dealers
Trade Confirmation
Reports
Updates
Clearing and
Settlement
Locked-In Trades
Nasdaq Workstatio
n
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26.9%
133%
136%
Historic Quote Volumes
1994 1995 1996 1997 1998 1999 20001993
500
1000
1500
2000
2500
3000
3500
4000
4500
Annualized GrowthAdditional 40% Growth
During Q1 ‘00
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April 18, 2001 – 3.19 Billion Shares
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www.Nasdaq.com
• Engineered for Scale• >12 million page
views• 25% International• Windows 2000• Intel-based Servers• Multiple Incoming
Real-Time Feeds
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NasdaqNasdaqJapanJapan
NasdaqNasdaqEuropeEurope
NasdaqNasdaqUSAUSA
Nasdaq Global Plans
SEHKSEHK
Latin Latin AmericaAmerica
Middle Middle EastEast
NasdaqNasdaqCanadaCanada
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The world comes full circle
ARPAARPA InternInternetet
.edu
.org.com
DARPADARPA
.gov
Targetedresearch
Generalresearch
Generalcommerce
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The Internet Promise• Access
– Open– 24 x 7– Global
• Customization– Personalization– Supply chain integration– Product Innovation
• Transparency– Self Service– Expose internal data
• Efficiency
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The Internet Tension
– How deep?– Do you have 24x7 capability?– What are the Global implications?
– How? For whom? How interactive?– For whom? What level of
openness?– Who will innovate?
– What is your customer looking for?– How deep? At what risk?
– What will go away…?
• Access– Open– 24 x 7– Global
• Customization– Personalization– Supply chain integration– Product Innovation
• Transparency– Self Service– Expose internal data
• Efficiency
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Pitfalls
• Quality of Service– Reliability– Predictability: The Monica
effect
• Performance– World Wide Wait– “BusyTone”
• Security - Entitlement/Trust
• Regulatory Constraints• Control shifts appears to
shift to users… but more is actually centralized
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Role of the CIO in securing e-commerce
• FACT 1: The Internet cannot be centrally governed – period…
• FACT 2: Customers demand an Internet venue for commerce
• Conclusion: Each participant must bear his/her weight and create a dome of compliance through its commercial associations
• Build resilient infrastructures• NEVER underestimate the power (needs) of self-service• Actively support industry information sharing vehicles
– NIPC, ISACs, CERT, etc…
• Certify your suppliers for the same standards• Proactively plan for Forensic Readiness
In the early 90’s 1 out of every 6 new US jobs was created by a Nasdaq Company.
In the new Millenium, perhaps a quarter of new jobs where Nasdaq operates will be created by
Nasdaq companies…
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Several “moon shots” underway
• Several simultaneous high visibility projects:– Doubling volume every 14 months– Re-architecting the entire underbelly of the company – 3rd year of $100 million new delivery projects
• Y2k, Decimals, Supermontage…
• Required on-site executive presence – Accept hand-off from prior site executive– Spearhead customer-focused cultural re-alignment
• Demutualizing/Privatizing the company• Expanding both globally and into new products
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SuperMontage
• Nasdaq’s Next Generation Trading System • Shows sum of all orders and quotes at various price levels• Acts as a voluntary central repository for all Nasdaq activity• Provides competitive services to all participants equally• Shows investors many price levels beyond the current best• Replaces Nasdaq’s Current Transaction Systems• Provides for Increased Volume and Flexibility• Allows backward compatibility for all participants
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Nasdaq Japan
• First international subsidiary of a market• Targeting Nasdaq hybrid market structure• Initially operating through Osaka Securities
Exchange
• June 19, 2000 launch: over 40 new IPOs since 2000
• Connectivity to all major participants in Japan• Fully independent and operational corporation• Recently completed a round of private funding• Will launch Super Montage structure at end of 2001
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Nasdaq Europe
• Nasdaq is launching a native European Nasdaq market
• Nasdaq Europe has three initial phases of trading:– Easdaq systems (started March, 2001]– New Nasdaq European Trading System (May, 2001]– Nasdaq European Supermontage System [Q4 2001]
• Nasdaq Europe will trade all applicable European stocks
• Nasdaq Europe will be the IPO market of choice in Europe
• Nasdaq Europe will offer other global Nasdaq products as well
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NasdaqWeb
Services
Global Trading Platform
Nasdaq Trading Network
NasdaqJapan
Nasdaq US
NasdaqEurope
Global Linkage
Professional Traders
InternetServices
Other Markets