BOCA RATON, Fla. — The National Assn. of Securities Dealers, parent of the electronic Nasdaq Stock Market, might sell shares of itself to the public sometime after 2000, NASD Chairman and Chief Executive Frank Zarb said Sunday.
Speaking at a conference of stock traders, Zarb said such a public offering is possible.
"It has a lot of appeal," he said. "I think it's going to be looked at with more detail."
A stock offering could raise billions of dollars for the NASD, which is owned by the nation's brokerage firms and has been on an acquisition tear. Earlier this year, it agreed to buy the American Stock Exchange and spend $140 million on joint marketing and upgrading its technology. It also agreed to acquire the smaller Philadelphia Stock Exchange.
Moreover, the NASD is discussing an alliance with the holding company for Frankfurt's securities exchanges and faces an ongoing rivalry with the dominant New York Stock Exchange for company listings and market share.
Yet Zarb, after mentioning the possibility of an offering, immediately acknowledged that many hurdles exist. The NASD's role as Nasdaq regulator might conflict with its obligations as a public company, he said.
For example, if the NASD faced declining revenue, shareholders might pressure the organization to cut its regulatory budget, he said. That, in turn, could weaken the market and undermine investor confidence.
"How would you do that?" Zarb asked rhetorically in an interview.
Zarb said an offering would "harmonize" the interests of the NASD with its issuers and market makers by giving them stakes in the organization, though there might be industry opposition. Some Wall Street firms might fear a bottom-line-oriented NASD would muscle in on their business.
Kenneth Pasternak, president and chief executive of Knight/Trimark Group Inc., a Nasdaq market maker, said he'd be concerned a public NASD might expand into making markets itself.
"They'd have a lot of resistance to overcome," Pasternak said about an offering. "I don't think it's practical. It's not impossible, though."