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Nasdaq to Overhaul its Fixed Income Trading Business – Financial Times

Full Article: Financial Times

Nasdaq has unveiled a radical overhaul to its under-performing fixed-income trading business, taking a $578m charge to end its eSpeed brand name and close its London futures venue. The US exchanges operator said that the impairment charge was because of a decline in operating performance and “a strategic change in the direction of our fixed-income business”.

Comments
  • Sundown
    SundownFebruary 6, 2017"If one remembers why Nasdaq bought eSpeed is because Bob Greifeld was betting (prematurely) on the volumes and volatility to return to the UST market and hence become a strong player in fixed income. He paid an absurdly high price for it (everyone thought so at the time) as we all know. The real problem was lack of business insight- the failure of Nasdaq to understand the changes in market structure. eSpeed's volume (at least 50%) was dominated by PTFs who extracted v…"
  • Goose
    GooseFebruary 3, 2017"I was always impressed with the sale price vs. the market share and instrument breadth of eSpeed. This is cuffing it, so perhaps a poster/reader has a more accurate depiction. At the sale, you had the treasury market, IDB market ~40% of volumes, eSpeed ~40% of that, trading mainly on the run treasuries, so 12 cusips? I see they are focusing on the off the run business, do they already have meaningful traction there, or is this a new push? It’s rare to get the better o…"
  • Wolfman
    WolfmanFebruary 3, 2017"This appears to be a full departure from the on the run treasury business, the largest and most electronic fixed market globally. For NASDAQ to abandon it and focus on the off the run market seems odd. With the expiry of the non-compete, BGC will likely enter the on the run market and try to regain some market share from BrokerTec. That said, John Shay is a capable leader and I'm looking forward to seeing what he does going forward. HL, great trade.…"

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3 Comments on "Nasdaq to Overhaul its Fixed Income Trading Business – Financial Times"

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Wolfman
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This appears to be a full departure from the on the run treasury business, the largest and most electronic fixed market globally. For NASDAQ to abandon it and focus on the off the run market seems odd. With the expiry of the non-compete, BGC will likely enter the on the run market and try to regain some market share from BrokerTec.
That said, John Shay is a capable leader and I’m looking forward to seeing what he does going forward.
HL, great trade.

Goose
Member
I was always impressed with the sale price vs. the market share and instrument breadth of eSpeed. This is cuffing it, so perhaps a poster/reader has a more accurate depiction. At the sale, you had the treasury market, IDB market ~40% of volumes, eSpeed ~40% of that, trading mainly on the run treasuries, so 12 cusips? I see they are focusing on the off the run business, do they already have meaningful traction there, or is this a new push? It’s rare to get the better of a trade vs. Howard Lutnick. When asked by CNBC if Nasdaq paid a… Read more »
Sundown
Member
If one remembers why Nasdaq bought eSpeed is because Bob Greifeld was betting (prematurely) on the volumes and volatility to return to the UST market and hence become a strong player in fixed income. He paid an absurdly high price for it (everyone thought so at the time) as we all know. The real problem was lack of business insight- the failure of Nasdaq to understand the changes in market structure. eSpeed’s volume (at least 50%) was dominated by PTFs who extracted value from the eSpeed public market. The dealers, who create value with actual client volume and risk transfer… Read more »
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