Nasdaq, the New York-based stock market for technology companies, last week announced plans to set up in Europe, in a move that could provide a huge boost for IT firms. The news stunned the London Stock Exchange (LSE), the most conservative and consequently most vulnerable of European stock markets, which has been stubbornly resistant to the kind of radical changes necessary for its credibility.
With the backing of Softbank and French utility Vivendi, and investment promised from some of the worldÆs largest banks, Nasdaq-Europe will offer investors an internet-accessible market, open to both retail and professional investors.
The weakness of the London market has been strict requirements on eligibility while Nasdaq puts the emphasis on strict standards for disclosure, to ensure investors are well informed. The one European market most closely modeled on Nasdaq, GermanyÆs Neuer Markt, has been its most successful and IT companies in the UK have looked enviously at the ease by which their Germany counterparts have raised money.
The prospect of an IPO on Nasdaq-Europe will be an enormous encouragement to start-ups in European markets where venture capitalism is far less well developed than in the US. Ironically, Nasdaq-EuropeÆs launch came in a week when the LSE introduced the TechMark index of the main technology companies, in the hope of encouraging tracking funds. It was, as always, too little and far too late.
