A 1968 MBA from the University of Pennsylvania’s Wharton School,
Alfred R Berkeley III, has been associated with the financial industry since his graduation. He was appointed to his current hot seat as President of The Nasdaq Stock Market, Inc, in 1996 and since then has been leading the Nasdaq charge across the technology world. With plans to start Nasdaq across the globe with Japan and Europe in the pipeline, Berkeley is now taking the tech exchange global. Prior to joining Nasdaq, he was with Alex Brown & Sons. Visiting India recently, he spoke to DATAQUEST Group Editor, Prasanto K Roy about Nasdaq’s plans for the region, and more. Excerpts:
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past weeks have seen tech stocks severely hit on the Nasdaq and elsewhere. Is
this the brick and mortar world making a comeback, or the end of those
staggering valuations?
I think there are two things at
work. One is that more and more companies have been a little bit slower to show
their web activities, but now they are beginning to do so–so in that way it is
a comeback. However I would not underestimate the strength of traditional
companies as they begin to deploy their web strategies. The other thing is that
in the early days of the web companies, there was a scarcity of value and there
were very few companies in the dotcom realm–so investors were trying to find
ways to participate in the web. Now as more and more dotcom companies are
tapping the market, the demand-supply gap is being filled up and investors are
getting much choosier.
How important is India to Nasdaq?
India is going to be a very
significant market for the whole world, and Nasdaq needs to be here. We need to
have a presence here, and that’s one of the key reasons for my visit. We want
to open our regional office in India.
How many companies do you expect
to see listed on the Nasdaq by the year-end?
I don’t know what the future
figures are going to be, but I can tell you the current facts. As of now we are
talking to several companies and about a dozen appear to be quite serious about
listing with us. We will be delighted with four to five companies listing their
shares, but it could be more.
Apart from the few big names of
the Infosys genre, is India big enough a brand to support other small tech
companies listing on the Nasdaq?
Absolutely. Infosys and Satyam
have done wonders for American awareness of the growth potential in India.
At Nasscom 2000, both Nasdaq and
NYSE were very visible. What are your plans for promoting Nasdaq in India?
In terms of specific efforts to
gain visibility, obviously we will have our office here, and we are going to
make a series of efforts to reach out and let people know that we are here. We
are yet to iron out the details.
Wipro is going for a NYSE
listing, not Nasdaq. It’s the definitive tech giant. Why do you think they
made such a choice?
Well I don’t know why
individual companies make their listing choices. We have several wonderful
markets in the US. However we think that our business model is particularly good
for growth companies. Again, I can’t speak for any company decision to choose
Nasdaq versus any other exchange in the US.
So should we expect many
brick-and-mortar companies with new e-strategies getting on to the Nasdaq?
Many are already on the Nasdaq
and other markets, and in many cases they are bringing their dotcom businesses
to Nasdaq as separate companies.
How significant a driver will the
dotcoms be in the future? Will they continue to heavily influence the stock
indexes, or would we see some correction?
I think that the web is a fairly
long-term phenomenon. One needs to understand that a significant portion of the
world’s economy is moving to a new lower cost curve. The web is similar to the
railroad industry about 150 years ago. The railroad moved the physical
distribution of goods and people to a new lower cost curve and profoundly
changed the economics of the world. The same thing is happening with the web and
it is profoundly changing the economics of the non-physical part of commerce. So
the risk is not in terms of whether the web will be around, but whether specific
companies are going to be around or not.
Nasdaq has been talking about
regional stock exchanges particularly in Japan and Europe. What is the status of
those, and are there any similar plans for India?
We hope to be trading in Japan in
July and hope to begin trading by the early part of next year in Europe. As of
now, we have no specific plans to create a Nasdaq relationship in India, but are
creating a regional marketing office in India as a first step towards creating
more visibility in the country.
Will there be a big shift in
trading volume away from brick and mortar exchanges to online or virtual
exchanges?
Well, the idea that you have to physically be in
one place to trade stocks is an obsolete one. I think that what counts is
gathering liquidity, and that’s most appropriately done electronically,
incorporating as many people as possible into the gathering process.