Turning your business inside out safely.

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Turning your business inside out safely.

• Gregor Bailar
• CIO EVP of Operations
• Nasdaq Stock Market, Inc.
• May 2001

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A Perpetual Start-up

• Built on Technology
• Competing Daily for Business
• Riding Incredible Growth
• Continually re-inventing our self
• Creating a Global Brand

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The Nasdaq Stock Market, Inc.

• Opened in 1971
• Worlds First Electronic Stock Market
• Largest Stock Market in the USA
• Over 20 Trillion traded in 2000
• 70 to 115 Billion traded daily
• Lists 4,829 Companies and 5210 Issues
• Over 600 Companies over 1 Billion
• Regularly Handles 2 Billion Shares

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Worlds Leading Stock Markets
Nasdaqs Dollar Volume Ranks 1 in the World.
15.5 Trillion
Values in Billions YTD for 2000 as of Sept. 2000
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Dollar Volume Growth
Percentage Change in Dollar Volume of the Major
Markets, 1990 - 1999
1876
515
475
171
14
Nasdaq
NYSE
London
Tokyo
Deutsche
Source International Federation of Stock
Exchanges (FIBV) As of 11/30/99
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Total Number of IPOs
Nasdaq
NYSE
Amex
1998
1999
2000
Source CommScan LLC and Securities Data Company.
As of 12/31/99, excludes closed-end funds.
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A little history
3.19 BSD April 18
3.18 BSD Jan 3
2.881 BSD April 4
2300 MSD
1998
1999
2000
2001
2001
2000
1997
1998
1760 MSD
1.34 BSD Oct 28
1054 MSD
700 MSD
500 MSD
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Nasdaq Operating Statistics

• Worlds Largest Real-time Network 7,500 Screens
• Retail Commercial Data Subscribers 500,000 Subs
  cribers
• Peak Daily Share Volume 3.19 Billion
• Average Daily Share Volume (YTD) 2.0 Billion
• Simultaneous Price Discovery lt180 msec
• Peak Transaction Rate 4000 TPS
• Peak Daily Page Views 12 Million
• Annual Technology Spend (2001) 500 Million
• Production System Upgrades 232 Releases

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Trading Network Topography
Connectivity Points of Presence
Canada
Trumbull

Rockville

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Nasdaq Domestic Technology Centers
Trumbull Connecticut
Primary site for market systems Backup site for
post-trade, Web-site systems 75,000 sq ft Data
Center 550 technologists 3 buildings
New York

• Nasdaq Market Site operations
• Tier III SWAT Team
• 2500 sq ft Data Center
• 15 technologists
• 2 locations (Wall Street
• and Times Square)

Rockville Maryland
Backup site for market systems Primary site for
post-trade, Web-site systems 30,000 sq ft Data
Center 300 technologists
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Nasdaq Market Systems
Broker Dealers
Quotation
Quote
Quote Data
Updates
Nasdaq Workstation
Quote and Trade Data Vendors
Execution
Orders
Trade Reporting
Computer to Computer Links
Trade
Trade Data
Reports
Clearing and Settlement
Trade Confirmation
Locked-In Trades
Market Surveillance
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Historic Quote Volumes
4500
4000
Annualized Growth
3500
Additional 40 Growth During Q1 00
3000
2500
2000
1500
26.9
1000
500
1994
1995
1996
1997
1998
1999
2000
1993
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April 18, 2001 3.19 Billion Shares
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www.Nasdaq.com

• Engineered for Scale
• gt12 million page views
• 25 International
• Windows 2000
• Intel-based Servers
• Multiple Incoming Real-Time Feeds

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Nasdaq Market Site

• Eight story tower displays the largest video
  display screen in the world
• 90 feet by 120 feet (10,736 sf, or ¼ acre)
• 18,677,760 LEDs
• Broadcast Facility with over 150 broadcasts per
  day to over 25 different networks from all over
  the world
• More than 5000 visitors monthly
• Went live December 1999 in Times Square

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Nasdaq Global Plans
Nasdaq Canada
Nasdaq Europe
Nasdaq Japan
Nasdaq USA
SEHK
Middle East
Latin America
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The world comes full circle
Targeted research
General research
General commerce
ARPA
Internet
DARPA
.edu .org
.com
.gov
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The Internet Promise

• Access
• Open
• 24 x 7
• Global
• Customization
• Personalization
• Supply chain integration
• Product Innovation
• Transparency
• Self Service
• Expose internal data
• Efficiency

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The Internet Tension

• How deep?
• Do you have 24x7 capability?
• What are the Global implications?
• How? For whom? How interactive?
• For whom? What level of openness?
• Who will innovate?
• What is your customer looking for?
• How deep? At what risk?
• What will go away?

• Access
• Open
• 24 x 7
• Global
• Customization
• Personalization
• Supply chain integration
• Product Innovation
• Transparency
• Self Service
• Expose internal data
• Efficiency

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Pitfalls

• Quality of Service
• Reliability
• Predictability The Monica effect
• Performance
• World Wide Wait
• BusyTone
• Security - Entitlement/Trust
• Regulatory Constraints
• Control shifts appears to shift to users but
  more is actually centralized

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Role of the CIO in securing e-commerce

• FACT 1 The Internet cannot be centrally
  governed period
• FACT 2 Customers demand an Internet venue for
  commerce
• Conclusion Each participant must bear his/her
  weight and create a dome of compliance through
  its commercial associations
• Build resilient infrastructures
• NEVER underestimate the power (needs) of
  self-service
• Actively support industry information sharing
  vehicles
• NIPC, ISACs, CERT, etc
• Certify your suppliers for the same standards
• Proactively plan for Forensic Readiness

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In the early 90s 1 out of every 6 new US jobs
was created by a Nasdaq Company. In the new
Millenium, perhaps a quarter of new jobs where
Nasdaq operates will be created by Nasdaq
companies
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Several moon shots underway

• Several simultaneous high visibility projects
• Doubling volume every 14 months
• Re-architecting the entire underbelly of the
  company
• 3rd year of 100 million new delivery projects
• Y2k, Decimals, Supermontage
• Required on-site executive presence
• Accept hand-off from prior site executive
• Spearhead customer-focused cultural re-alignment
• Demutualizing/Privatizing the company
• Expanding both globally and into new products

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SuperMontage

• Nasdaqs Next Generation Trading System
• Shows sum of all orders and quotes at various
  price levels
• Acts as a voluntary central repository for all
  Nasdaq activity
• Provides competitive services to all participants
  equally
• Shows investors many price levels beyond the
  current best
• Replaces Nasdaqs Current Transaction Systems
• Provides for Increased Volume and Flexibility
• Allows backward compatibility for all
  participants

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Nasdaq Japan

• First international subsidiary of a market
• Targeting Nasdaq hybrid market structure
• Initially operating through Osaka Securities
  Exchange
• June 19, 2000 launch over 40 new IPOs since
  2000
• Connectivity to all major participants in Japan
• Fully independent and operational corporation
• Recently completed a round of private funding
• Will launch Super Montage structure at end of
  2001

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Nasdaq Europe

• Nasdaq is launching a native European Nasdaq
  market
• Nasdaq Europe has three initial phases of
  trading
• Easdaq systems (started March, 2001
• New Nasdaq European Trading System (May, 2001
• Nasdaq European Supermontage System Q4 2001
• Nasdaq Europe will trade all applicable European
  stocks
• Nasdaq Europe will be the IPO market of choice in
  Europe
• Nasdaq Europe will offer other global Nasdaq
  products as well

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Global Trading Platform
Internet Services
Professional Traders
Nasdaq Trading Network
Nasdaq WebServices
Global Linkage
NasdaqEurope
Nasdaq US
Other Markets
NasdaqJapan