Can Robert Greifeld create a transatlantic stock exchange?

Nasdaq chief Robert Greifeld, who finished the 2002 Philadelphia marathon in just under four hours, is not a man who is easily deterred. A fortnight after his £2.4bn offer for the London Stock Exchange was rebuffed, he is back with a bang.

Having paid nearly £12 a share to acquire 15% of the exchange, he finds himself the LSE’s biggest shareholder – ensuring he’ll have a big say in the exchange’s future.

A man without a plan

Greifeld, 48, operates by rather a simple philosophy, says The Business. “If you try to come up with a plan,” he says, “it’s never going to develop the way you think.” A better approach is “to focus on what you need to do that day and make sure that you like what you’re doing”.

Unlike many Wall Street honchos, including his arch-rival, New York Stock Exchange chief John Thain, he was not born into a wealthy family, nor educated at an Ivy League university. Instead, “he lived day-to-day for much of his early life, eking out an existence”.

Born in 1958 in New York state, he worked as a supermarket stock boy and a night watchman. He says his teenage years were shaped by a love of the Beat generation poets, and Greifeld paid his way through an English degree at Iona college, before taking a $13,000-a-year position at Burroughs (now Unisys). Then “it was about earning the paycheck for the next day. I never thought two steps ahead with respect to career management.”

Nuts and bolts

By 1986, Greifeld had scraped together enough cash to do an MBA at New York State College. Ironically, says the FT, he wrote his graduate thesis on Nasdaq, then getting into its stride as America’s tech-centred second equities market.

In 1991 Greifeld joined Automated Securities Clearance where he flourished as a nuts-and-bolts specialist, developing Brut – one of the first electronic communications networks (ECNs).

When Automated Securities was taken over by SunGard in 1999, Greifeld was put in charge of the brokerage systems group that handled most of Nasdaq’s trades. He recognised early on that the exchange’s Achilles Heel was its systems. And when the bubble burst on the dotcom boom, leaving Nasdaq nursing record losses, he was proved right, says BusinessWeek.

Nasdaq resurgent

When Greifeld took charge in June 2003, “he set himself a Herculean task: to turn the bubble-bruised Nasdaq into the dominant US equity market”, says The Daily Deal. Few rated his chances. By 8am on his first day at One Liberty Plaza, Greifeld had already made his presence felt: “the entire top layer of management was gone”.

“Times change,” announced Greifeld as he killed off the ailing Nasdaq Europe in apparent recognition that “ambitions of global dominance were nothing more than delusions of grandeur”, says the FT. Instead, he concentrated on building up the market’s technical reputation, buying Brut from SunGard in 2004 and Instinet from Reuters the following year, thereby combining the two largest electronic markets for US equities.

The success of this strategy became clear when big names, including Charles Schwab and Hewlett-Packard, were tempted into the fold. Nasdaq’s share price, meanwhile, has risen 593% during Greifeld’s
34 months in charge.

The Marathon Man has not lost his ability to surprise, concludes The Business. Just months ago he told shareholders “he wasn’t interested in the worldwide frenzy of exchange mergers”. But then, as he says, “things rarely turn out according to script”.

“Why pick the ugly sister?” Suitors line up for the LSE

If Greifeld succeeds in creating the first transatlantic stock exchange, he will have secured a place in financial history, says the International Herald Tribune. He will also have taken a giant leap towards his ultimate goal of “getting out in front of the New York Stock Exchange”.

Greifeld has already shown himself to be a wily tactician by launching the first salvo for the London Stock Exchange while the NYSE was distracted at home. By securing the support of the LSE’s largest shareholders, Threadneedle and Scottish Widows, he helped counter the frosty reception he received from LSE chief Clara Furse.

Even so, Greifeld knows that outmanoeuvring his NYSE counterpart, John Thain, will be no easy task. As SunGard chief Cristobel Conde told Bloomberg News: “In Thain and Greifeld, you have two extremely competitive executives. They both absolutely hate to lose.”
Greifeld’s chief problem is that Nasdaq “remains less than ideal as a partner”, says the Evening Standard.

True, the synergies to be gained in technology would be greater than with a European exchange, “but if the LSE wants an American partner, why pick the ugly sister”? The NYSE is surely a better bet: “it is bigger and more respectable and has a presence in derivatives through Archipelago that the LSE needs but Nasdaq can’t offer.”

Few are in any doubt that the game has only just begun. But even if his “piecemeal” strategy fails to secure the LSE, Greifeld is unlikely to emerge as a loser, says The Business. Should another serious bidder step in, then the LSE’s share price should rise again, increasing the value of Nasdaq’s stake. Having no immediate plan may yet pay off for Greifeld.