By Jonathan Spicer
NEW YORK, Oct 29 (Reuters) - Nasdaq Stock Market parent Nasdaq OMX has suspended its long-shot plan to clear U.S. equity trades, saying in a note to traders on Thursday that many of its objectives were already met.
The company long planned to launch a clearinghouse, called NASDAQ Clearing Corporation (NCC), sometime this year that would challenge the user-owned Depository Trust & Clearing Corp, whose unit clears virtually all U.S. stock trading.
Nasdaq said on Thursday that merely by presenting the possibility of competition, it helped lower the total costs of trading, innovation, and better services and efficiencies -- a claim the DTCC rejected.
Nasdaq said: 'DTCC has made a number of changes to its ... pricing models and schedules and promised significant improvements in record and guarantee processing, since Nasdaq OMX first indicated its intention to enter the clearing space.
'These changes already bring much of the value that we intended for the NCC to bring to industry participants.'
DTCC spokesman Stuart Goldstein told Reuters: 'Nothing we've done has been in response' to Nasdaq's planned clearinghouse, adding: 'The industry just did not buy the proposition that (Nasdaq) could offer clearing cheaper.'
The DTCC unveiled several new services and partnerships this year -- including a portfolio clearing joint venture with Nasdaq rival NYSE Euronext -- but has not yet unveiled 2009 fee reductions.
It reduced clearing fees by $100 million in 2008 and by $40 million in 2007, Goldstein said, adding that fees are derived from overall annual trading volumes.
A Nasdaq spokeswoman did not immediately return a call.
Nasdaq, which announced its intention to challenge DTCC a year ago, said it will keep the two clearing licenses it acquired in buying the Boston Stock Exchange, from which NCC came, and the Philadelphia Stock Exchange in recent years.
'They saw an opportunity with the rates being charged last year, but that's gone now,' said Chris Allan, an analyst at broker-dealer Pali Capital.
The suspension was unlikely to impact Nasdaq's shares because few expected the plan to unfold, he added.
Nasdaq sent the note to traders -- acquired by Reuters -- on Thursday afternoon. Its shares closed up 3.9 percent at $18.96.
(Reporting by Jonathan Spicer; editing by Andre Grenon) Keywords: NASDAQOMX CLEARING/ (jonathan.spicer@thomsonreuters.com +1-646-223-6253; Reuters Messaging: jonathan.spicer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Oct 29 (Reuters) - Nasdaq Stock Market parent Nasdaq OMX has suspended its long-shot plan to clear U.S. equity trades, saying in a note to traders on Thursday that many of its objectives were already met.
The company long planned to launch a clearinghouse, called NASDAQ Clearing Corporation (NCC), sometime this year that would challenge the user-owned Depository Trust & Clearing Corp, whose unit clears virtually all U.S. stock trading.
Nasdaq said on Thursday that merely by presenting the possibility of competition, it helped lower the total costs of trading, innovation, and better services and efficiencies -- a claim the DTCC rejected.
Nasdaq said: 'DTCC has made a number of changes to its ... pricing models and schedules and promised significant improvements in record and guarantee processing, since Nasdaq OMX first indicated its intention to enter the clearing space.
'These changes already bring much of the value that we intended for the NCC to bring to industry participants.'
DTCC spokesman Stuart Goldstein told Reuters: 'Nothing we've done has been in response' to Nasdaq's planned clearinghouse, adding: 'The industry just did not buy the proposition that (Nasdaq) could offer clearing cheaper.'
The DTCC unveiled several new services and partnerships this year -- including a portfolio clearing joint venture with Nasdaq rival NYSE Euronext -- but has not yet unveiled 2009 fee reductions.
It reduced clearing fees by $100 million in 2008 and by $40 million in 2007, Goldstein said, adding that fees are derived from overall annual trading volumes.
A Nasdaq spokeswoman did not immediately return a call.
Nasdaq, which announced its intention to challenge DTCC a year ago, said it will keep the two clearing licenses it acquired in buying the Boston Stock Exchange, from which NCC came, and the Philadelphia Stock Exchange in recent years.
'They saw an opportunity with the rates being charged last year, but that's gone now,' said Chris Allan, an analyst at broker-dealer Pali Capital.
The suspension was unlikely to impact Nasdaq's shares because few expected the plan to unfold, he added.
Nasdaq sent the note to traders -- acquired by Reuters -- on Thursday afternoon. Its shares closed up 3.9 percent at $18.96.
(Reporting by Jonathan Spicer; editing by Andre Grenon) Keywords: NASDAQOMX CLEARING/ (jonathan.spicer@thomsonreuters.com +1-646-223-6253; Reuters Messaging: jonathan.spicer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.