NASDAQ, SESDAQ To Swap Quotes; First Trans-Pacific Link In Equities Markets

The first quote swap between equities markets in the U.S. and the Pacific Basin is scheduled to begin by the end of the year. NASDAQ plans to swap closing market data on a small group of stocks with SESDAQ -- the Stock Exchange of Singapore Dealing and Automated Quotation system.

SESDAQ is Singapore's attempt to create a dealer market off the trading floor of its stock exchange, and the NASDAQ link is intended to increase its attractiveness to potential market makers. NASD president Gordon Macklin calls the link "a major step toward an integrated three-way trading linkage among markets in Europe, the U.S., and the Pacific Basin." NASDAQ has been swapping quotes with the London Stock Exchange since April 1986.

The ambitions of NASDAQ and SESDAQ notwithstanding, the first phase of the Singapore link is modest. No live data will be sent -- only closing quotations -- and only about 50 OTC securities traded in both markets will be involved. The London link, by contrast, carries live data on over 200 securities.

The daily NASDAQ transmission will comprise quotes from an average of 25 market makers in each security -- the same data available on a NASDAQ Level II terminal, says Dick Justice, NASD executive vice president. The data file will be sent via packet-switched network at 6:00 PM eastern time -- 7:00 AM in Singapore.

The NASDAQ quotes will become a database available for query on the SESDAQ system, which uses IBM-PCs as terminals, Justice says. Singapore market makers can then use the information to establish their opening quotes.

The reciprocal transmission will come at 5:00 PM in Singapore, or 4:00 AM in New York. For the time being, the SESDAQ data won't go to London, Justice says.

SESDAQ was chosen for the link, Justice says, partly because of its similarity to NASDAQ. "In Singapore -- as in london -- it's a relatively simple process to put those markets together."