As senior vice president of NASDAQ’s Capital Markets
Group, Robert H. McCooey Jr. heads NASDAQ’s efforts to
keep private equity firms, investment banks and
institutional investors informed about NASDAQ issues,
initiatives and services. It is the exchange’s first centralized
group that examines customer needs across all of its business units,
offering companies an impressive breadth of support and services.
EQUITIES sat down with McCooey to discuss the Capital Markets Group
and the future of NASDAQ in today’s increasingly global marketplace.
EQUITIES: Tell us about your background.
McCooey: I founded a brokerage firm in 1988, which grew from a one-man shop to 45 employees and focused primarily on agency execution for institutional buy-side clients on the floor of the New York Stock Exchange. At the height of the NYSE’s existence as a primary marketplace, we were the largest independent agency-execution firm on its floor. I was also on every major committee that occurred at the NYSE during those 20 years, and I served on the board of the NYSE from 2003 to 2006.
EQUITIES: And you joined the NASDAQ in 2006?
McCooey: Yes, [NASDAQ CEO] Bob Greifeld approached me to join NASDAQ to form the Capital Markets Group, which would focus on NASDAQ’s relationships with private-equity and venture-capital investment banks and firms, as well as the institutional buy-side. We knew how important those firms were to NASDAQ’s continued listing business, and we wanted to make sure that they knew that NASDAQ had a group that was going to be involved with them and was going to work on their needs. At that point, NASDAQ had just undergone some dramatic changes, not only by trading equities but also by spending a tremendous amount of time and effort in developing a suite of products and services for our issuers.
EQUITIES: How does the Capital Markets Group promote the growth of small companies?
McCooey: Primarily through our understanding of the needs of private-equity and venture-capital firms, and the way we use our internal teams to build out or acquire the services that will help public companies grow and also help smooth the transition from private to public. We also make sure that these companies have the tools at their disposal that will help them be the most effective, most successful public company that they can be, and that’s really the goal of the Capital Markets Group. That’s really how we can measure the value of our success.
EQUITIES: Tell us a little bit about the products and services that you offer.
McCooey: Let’s start with risk management. About three and a half years ago, NASDAQ bought a company called Carpenter Moore, the leading directors and officers liability-insurance provider. Their benchmarking survey, which was recently featured in the Financial Times, is able to make sure that our issuers are getting good data on their insurance limits by understanding what their peers are paying and making sure that they’re paying a fair price relative to the coverage.
Let’s move from there to a very exciting company that we incubated last year. We’d heard that many of our issuers were having a challenging time when it came to recruiting independent directors for their boards, as the process is both time-consuming and costly. So NASDAQ offered a very innovative solution to this problem, called boardroomtrading.com. It’s an online, anonymous, profile-based matching solution that saves time and money for our issuers. So far, we’ve had over 2,700 people sign up as candidates for boards—60% of which have prior board experience—and companies can search this easy-to-navigate database to find those individuals who meet their criteria.
Another offering under the corporate-governance heading—under what we call Board Tools—is Director’s Desk, which provides secure, online board books for boards of directors. Since good board members are on more and more boards, Director’s Desk is a fully hosted ASP [application service provider] solution that allows companies to effectively and efficiently manage the work flow of the board. No longer do the corporate secretaries have to chase down board members to ensure that the board books are sent out and have the necessary information—some of which, by the time the board member gets it, is out of date. Now the corporate secretaries can schedule meetings and initiate surveys and voting while also giving the directors access to confidential information within a secure and fully encrypted platform.
EQUITIES: And what about in the investor relations area?
McCooey: There are two. One is called shareholder.com. All public companies are required to have an investor-relations section on their website, so shareholder.com is a best-of-class solution for corporations because they can have their investor-relations website hosted by shareholder.com, which provides effective shareholder communications and gathers data that can be pushed out and captured by shareholder.com. This offering is really for IR professionals because it gives them the tools they need to be successful in an ever-changing marketplace. It also offers the IR professional a synchronized approach to leverage investor interaction, which ensures that a company’s message is coming and going to the investment community effectively.
And then we have PrimeNewswire, a newswire distribution service. And it’s not just a newswire distribution service—it’s the best and most cost-effective press-release distribution service in the industry. Many companies—including JetBlue, Southern Company, and Northrop Grumman—have moved to PrimeNewswire because they see that we have the intellectual property to be able to push out those newswires to the right target audience and do it in a very cost-effective fashion.
EQUITIES: Are these services only available to NASDAQ-listed companies?
McCooey: They’re not. NASDAQ companies receive preferential pricing. We provide for NASDAQ-listed companies what we refer to as core services, so some of the services that are provided by each of those companies are provided to NASDAQ-listed companies. For example, some newswire distribution from Prime Newswire and quarterly webcasts delivered through shareholder.com are part of a company’s annual listing fee. So the listing fee on NASDAQ, which is significantly lower than our competitor’s listing fee, also comes with a suite of services that bring the fee even lower because of what we’re able to provide for our issuers.
EQUITIES: How many companies are at the NASDAQ and how many are in the Capital Market?
McCooey: There are 3,125 companies listed on NASDAQ and about 550 in the Capital Market.
EQUITIES: How many new listings did you have last year?
McCooey: I had 152 IPOs, 31 of which were transfers from the American Stock Exchange. I had one transfer that you may have heard about, DIRECTV, a $29 billion market-cap company that came from the New York Stock Exchange. Then we had a number of transfers from the Over-the-Counter Bulletin Board and the Pink Sheets. Approximately 50 additional listings came through there. We had 65% of the IPO market last year.
EQUITIES: How do you feel about companies coming up from the OTC markets?
McCooey: We’re excited to welcome those companies to NASDAQ because we think we have such an exciting value proposition from a trading standpoint, where we can capture the attention of market makers, and we think this is going to drive more liquidity and allow companies to gain visibility in that area and have investors recognize them once they’ve listed on NASDAQ. And from the products and services area, we just think it’s a tremendous opportunity for companies to come in and take advantage of these great products that we’ve built out for them in order to help them grow.
EQUITIES: What opportunities do you see for NASDAQ’s continued growth, especially in light of the OMX acquisition?
McCooey: We see a tremendous opportunity. We will be represented on six continents through this acquisition. We will either be the exchange or provide the technology for the exchange on 60 markets in 50 countries around the world. We’ll be running the NASDAQ stock market in the U.S., and we’ll have the Helsinki Exchange, which will not only be in the Baltic States but will continue to grow throughout Europe as we roll that out. And then the final and very important piece is our relationship with DIFX [Dubai International Financial Exchange] and Ports of Dubai. We will be a one-third owner of NASDAQ DIFX, which will be right there in the financial crossroads of the world in the heart of the Middle East. It’s got tremendous opportunity, both within the OMX and on DIFX for cross-listings and dual-listings, with which companies will be able to increase their visibility throughout the world.
EQUITIES: To what degree is the economy affecting the IPO market, and therefore NASDAQ listings?
McCooey: A lot of listings in the fourth quarter got pushed back, but I think the pipeline is still very, very strong. I think that the crisis we saw last year, which has continued into the beginning of this year, is financial in nature only. It’s affecting a number of issuers that are financially based and are having trouble getting deals done because investors are more skittish. But the fact is, many companies still have robust pipelines of orders. I spend a lot of time on the road talking to issuers and potential issuers, and the business is a lot better out there than the media would have you believe. I think some of this talk about recession ends up being a self-fulfilling prophecy. Things are good out there, and I think when the market settles down and we get away from these hundreds of daily point swings and back to a more normalized trading pattern, we’ll see a lot of companies that are cued up come into the public markets. We see a lot of pent-up demand for new issuers, and we see a lot of companies that are poised and ready to go.
EQUITIES: What do you think of the NYSE’s acquisition of the AMEX and its competitive positioning with NASDAQ?
McCooey: It’s challenging for me to completely understand what either party is getting out of the acquisition. The information flow to Wall Street as well as to the issuer community about the benefits of this acquisition has been sparse, and I think that issuers are seeing that the value proposition of listing on NASDAQ and that the NYSE’s pending acquisition has not stopped the pipeline of companies that are coming to NASDAQ.
EQUITIES: Any final words?
McCooey: We want to help public companies be as successful as possible, and that’s why we have the services that we have. That’s why we try as hard as we do to get out in front of issuers and talk about what the tremendous proposition is of being here—and I think it’s really starting to resonate.
— By Anthony W. Haddad
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