Nasdaq makes tall claims
This is in reference to the news item ‘Securities listed on Nasdaq US to be traded in Japan, Europe’ (Dec 6). We have seen in recent years that India has become a very attractive destination for the world’s leading stock exchanges such as NYSE, LSE and Nasdaq.
From time to time, these organisations make many claims (some tall) about why Indian companies should choose one of them over the others when they raise funds overseas.
One can’t fault the exchanges for slick marketing, but it is appalling how our supposedly well informed financial media faithfully reproduces these claims in toto, without any independent verification whatsoever.
Your news item is a case in point, where some tall claims made by Mr Ghanshyam Dass of Nasdaq have been given an unfortunate legitimacy.
The interlinking of Nasdaq with its Japan and Europe subsidiaries is still very much a pipe dream. It may happen, but much later, rather than sooner.
What Mr Dass did not say (naturally) was that Indian ADRs and GDRs are already being traded in substantial volumes in centres other than where they are listed. A few examples - Reliance’s GDRs listed in Luxembourg, traded in London. Similarly, VSNL’s ADRs listed on NYSE and Infosys’ ADRs (Nasdaq) are traded in London, while the LSE listed SBI GDRs are also traded at Luxembourg. There is nothing new about cross-border trading of equity, unless it is packaged so differently as to be unrecognisable by experienced financial journalists!
Nasdaq Europe and Japan are far from the thriving markets Mr Dass claims them to be. Nasdaq Europe in particular (since it was prominent in the article) is not known for robust liquidity — with less than two per cent of the total trading volume of European technology markets and just 0.2 per cent of the total European tech market cap.
Far from questioning the liquidity in other markets (shifting GDRS from London and Luxembourg), Nasdaq would do well to check what’s going on in its own backyard. Earlier this year, both Rediff and Satyam Infoway came close to being delisted from Nasdaq due to a lack of demand that made prices plummet to less than $1.
As someone working in a firm that advises Indian companies on overseas issues, I find it galling that our media still takes visiting executives from the UK or US at face value.
— K Narayanan, on e-mail