Nasdaq's New York nerve centre

"The founding members will strongly recommend that shareholders approve this transaction," Easdaq chairman Stanislas Yassukovich said (on Nasdaq Europe-headed paper).

When Easdaq has struggled to achieve the prominence it predicted on its formation in 1996, and found its ground increasingly stolen by other European exchanges, merger with a stock market of Nasdaq's prestige represents as much of a lifeline as an opportunity.

Easdaq's stated target at launch was to list 500 companies within a year.

By the end of February this year it had attracted 62 firms, with a further 100 or so traded on both Easdaq and Nasdaq.

Or put another way, by Mr Yassukovich: "This [takeover] transaction represents the culmination of many years of effort to create a pan-European stock market for growth companies which will be part of a global trading platform."

Pan-European ideals

Easdaq's raison d'etre at its birth indeed seemed strong.

A year of stock market turbulence

2000 May: LSE and Deutsche B�rse unveil plans to merge as iX Jul: LSE floated Aug: Sweden's OM Group bids for LSE Sept: iX plans fail Sept: Amsterdam, Brussels and Paris markets form Euronext Nov: OM bid fails Nov: Reuters and Morgan Stanley launch Jiway exchange 2001 Feb: Deutsche B�rse listed Feb: Clara Furse takes over at LSE

The exchange was launched into a Europe which was preparing to launch a single currency, yet whose financial markets were a rag bag of incompatible structures.

Easdaq, "designed expressly for a unified Europe", was backed by its own electronic trading platform and "seamless" back office functions.

As the "perfect fit for innovative companies and forward-looking investors" it seemed an ideal destination for the kind of firm seeking to launch into the dot.com explosion of the late 1990s.

Indeed, Easdaq was largely modelled on the new economy focused Nasdaq, which since its launch in 1971 has grown into the second largest stock market in the world, listing 4,700 companies.

Growing competition

Unfortunately floating firms, however "innovative" in their business practices, in listing often sought the prestige of a place on an established exchange.

And these stock markets also got wise to the opportunities presented in listing so-called 'growth companies'.

The London Stock Exchange launched Techmark, its Paris equivalent opened Le Nouveau Marche, while Frankfurt's Deutsche B�rse unveiled the Neuer Markt.

And as for "forward looking investors", the progress of the expansion and collapse of the dot.com bubble speaks volumes on that score.

Global ambitions

So why did Nasdaq bother to acquire such a troubled enterprise, when it has been courted as a potential merger partner even by Europe's top exchanges?

Frank Zarb: global vision

Nasdaq has long held ambitions to trade not just in the US, or even two continents, but worldwide to exploit an ever more global financial services industry.

"In a few years trading securities will be digital, global and accessible 24 hours day," chairman Frank Zarb has said.

"People will be able instantly to get stock-price quotations and instantly to execute a trade day or night, anywhere on the globe, with stock markets linked and almost all electronic."

Having launched Nasdaq Japan, Tuesday's deal ostensibly gives the exchange a foundation stone on which to base the European leg of its global expansion programme.

"Today's announcement moves us closer to achieving our strategic vision of an international Nasdaq," Mr Zarb said on Tuesday.

And while Nasdaq has declined to reveal how much it paid for its, in essence, 51% stake in Easdaq, comments from Mr Zarb reveal he has plenty of fire power in reserve.

"We continue to assess a wide range of possibilities with other European partners," he said.

Bargaining tactics

And the value of Nasdaq Europe is as much as a bargaining tool as a functioning exchange in itself.

There are plans to make the 50 top Nasdaq stocks also available through Nasdaq Europe

Exchange insider

Nasdaq has for years explored the possibility of entering the European market through a merger with one of Europe's major stock markets, in particular London Stock Exchange or Deutsche B�rse.

Following Tuesday's deal, Nasdaq will come to the table not as an outsider but a rival - the threat of which will become ever more apparent as it rolls out plans to persuade top US firms to list in Europe as well as New York.

"There are plans to make the 50 top Nasdaq stocks also available through Nasdaq Europe," an insider told BBC News Online.

Cultural fit

London Stock Exchange has long looked Nasdaq's most likely partner in Europe.

Besides being the continent's largest stock market, the LSE is based in a country whose business practices are in line with those of the US.

Indeed, Tuesday's announcement comes only a day after Nasdaq sealed a deal which will allow it to exploit in the US the renowned expertise of London's main futures and options exchange, Liffe.

Yet the spread of globalisation is prompting a willingness in Europe to look again at liberalising financial services, as last week's summit of EU leaders in Stockholm indicated.

And Deutsche B�rse emerged in January as a serious rival for Nasdaq's hand.

Fight back

London Stock Exchange has responded with aggression, through a series of initiatives designed to strengthen its position as an independent while increasing its appeal as a business partner.

Clara Fuse: has led aggressive strategy

Under Clara Furse, chief executive since February, the exchange has launched an international roadshow to promote its subsidiary Techmark and Aim markets, and secured deals to make back office operations more efficient and robust.

Yet aggressive action has not been matched with hostile words, as shown by an LSE release last week announcing a management restructure.

The release revealed plans not to sweep the world "but strengthen the power of our brand and internationalise our services".

The reshuffle places the exchange in a position not to conquer Europe but "to manage key strategic relationships and develop and implement strategic change".

The statement begs the question: with whom?

'Deep pool of liquidity'

Following the collapse last summer of plans to merge with Deutsche B�rse, a link with Nasdaq would seem an attractive way of winning influence over the digital, global and accessible securities market envisaged by Mr Zarb.

But what Nasdaq has gained through Tuesday's deal is not just a timezone, but time.

Every dealing day presents the exchange with a new opportunity to build on its European base.

The stocks it lists may be struggling, but Nasdaq is at least offering firms the goal of global and round-the-clock trading - access to a "deep pool of liquidity" as Mr Zarb calls it - to greet them at the end of a rough ride.