Euronext Liffe go solo.(Nasdaq Wants Out)(Euronext Liffe has assumed sole ownership of Nasdaq...

With the Chicago exchanges concerned over Eurex setting up the "first" overseas-owned, U.S.-based futures exchange, Euronext Liffe quietly has assumed that title by taking over sole ownership of Nasdaq Liffe Markets (NQLX), the exchange it founded with Nasdaq to trade security futures products.

The original venture was a partnership between Nasdaq and the London International Futures and Options Exchange (Liffe) and partly the result of Liffe's frustration with regulatory hurdles to offering its Universal Stock futures in the United States (see Chartview). The union gave Liffe a U.S. base to offer futures on individual stocks and was established prior to pan-European exchange Euronext's acquisition of Liffe.

The added resources of Euronext Liffe should make the impact of Nasdaq's departure less significant, according to John Foyle, Euronext Liffe deputy chief executive. Foyle says being part of a much larger listed company gives them access to more capital.

"[Euronext's presence] allows investing in developing the business to an extent that might not have been possible if Liffe remained independent," Foyle says.

Tom Ascher, NQLX chairman and CEO, says Euronext Liffe's willingness to take over full ownership of NQLX is an endorsement of the company. "We are happy being a single parent child," Ascher says. His comments, however, came one week after he dismissed rumors of Nasdaq dropping out of the partnership referring to Nasdaq's commitment to NQLX as "real and solid."

The move was part of a Nasdaq review of its business model, coming at a time it is struggling to maintain market share across the board. Nasdaq says it wants to refocus efforts on its U.S. equities markets business, according to Nasdaq President and CEO Robert Greifeld. In addition to dropping out of NQLX, Nasdaq will close its pan-European stock market, Nasdaq Europe; end plans to create the listing platform Bulletin Board Exchange; and discontinue the order routing system Liquidity Tracker and order management system Nasdaq Tools.

Nasdaq's involvement in NQLX gave the exchange the inside track on the licensing of Nasdaq index-products. The move may complicate negotiations between NQLX and Nasdaq over such agreements, including those based on the Nasdaq Composite.

Though he acknowledges that the process will be more competitive with Nasdaq no longer their parent, Ascher contends the two companies parted on good terms and are committed to ongoing licensing discussions.

"We have reached licensing agreements with companies that are not our parent," he says. "We see no reason why we can't do the same with Nasdaq."

The addition of purely futures products based on the Russell 1000 indexes and the possibility of a Nasdaq Composite futures contract places NQLX in competition with current U.S. futures exchanges, as well as fellow security futures exchange OneChicago.

A Eurex source acknowledges that the move technically means that NQLX will be the first European-owned exchange running in America but adds, "they don't really have the competitive range of products necessary to call themselves a full-fledged futures exchange."

Nasdaq Liffe markets will no longer be able to use the Nasdaq name, but plans to continue as NQLX.