July 20, 2001
The Changing Face of the Economy

Amidst all the haze and hoopla of the post dotcom economy, exchanges such as The London Stock Exchange, EASDAQ, and the NASDAQ itself are churning out valuable lessons for us to review and learn from.

Shiladitya 'Sunny' Ghosh*, Consultant, NetGalactic Europe
sunny@netgalactic.com

NASDAQ has been dispersing anxiety throught the economy for the last 3 quarters. The greater impact have been from the West, not to mention the lessons for the East, that thousands of analysts have reminded over and over again across different forums and mediums.

I have personally witnessed various sessions the last year, where renowned firms such as Morgan Stanley Dean Witter, PBHG Technology & Communication Funds, Reuters and Forrester Group debated the working model of Venture capital firms, NASDAQ and its crazy valuations. Not to mention the common parameter was to identify how the Boo.Com became Boom.com after an initial funding of more than GBP 10 mn within six months time. Why and who are the software giants for the new economy? Where lies tomorrow's technology? These are the principal concerns for all such high-end investing firms, hitting the fence of NASDAQ. What trend does the NASDAQ bring into the table?

Remarkable indeed is the changing face of the economy! Not even an year before, companies such as Oracle, Cisco, Ariba, Vignette, and not to forget the darling of all, Microsoft was quoted to have all their acts set, to cross the chasm. Yet to me, the chasm is far too complex to sail smoothly across. I firmly believe that the chasm itself is shaping up and many firms are breathing their yesterday's acts of success.

I couldn't agree any more with Mr. Chuck Phillip, Analyst, Morgan Stanley Dean Witter, quoting last year about the Tech bazaar. As he mentioned rightly about the $64-trillion question to ask each other: What's the size of the market? Is their technology right? Does it help in real- time computing? What share of the market can it own? And-the pies at large- Can management execute and make money out of it?

The cardinal rules are exploding. " Lets look at the fundamentals again. You can start a company with entrepreneurs, but its time to have an outlook of a management evangelist to cross the chasm and the model of the business lies in re-inventing the cycle, not holding ", states the 50 year old, Author, Director and Chair person for various conferences, from Net-Media, Dr. Milverton Wallace.

Certainly, real-time business processes bring all that stock exchanges such as NASDAQ wants in the table for today's business, but yet the model itself will have to revolve over and over again. The .Net from Microsoft is a true revolution, the underlying force for open source freeware movement, the growing killer apps in the world of mobile computing, the jazzed up data devices with voice call facilities from Nokia, are the present critical technology mass firms to create a hungama in NASDAQ and are here to stay for years to come.

Everything that's interesting in the marketplace today derives from that transition to real-time computing. Governments and Communities are both driven dramatically in some form of online businesses across various patterns of life. For example, National Identity cards could be a reality during the next parliament, and parties from all fronts are encouraging online government services in UK too. It's quite clear to be based on smart cards and it's projected to be the biggest controversial IT projects the UK government has handled so far.

Far below, uniqueness for such an initiative laid with a game plan of introducing two mn teenagers with smart cards by next year. One can imagine what does smart cards bring for us and this could bring a change for the global online society. The smart card vendor Gemplus (www.gemplus.com) is driving the entire project hand to hand with the Government. Such movements are more than welcoming within and outside the London stock exchange.

Among the other stock exchanges, the London Stock exchange has enough to hold back to itself. The newly spoken about Cohort analysis is the use of complex algorithm and existing customer data to spot patterns in real-time customers. The exchange is using it to prevent insider trading by taking algorithmic assessment and pattern extraction to watch the trader's movements and what an inside trading looks like. The need for such an analysis will increase more dramatically with the demand of mobile browsing transactional capabilities. This kind of business-efficient, working models has a long way to drive.

NASDAQ and the examples does it set for itself, is quite a concern for each and every investor trading across in this new economy. It all started a year before, when the proposed merger between London and Frankfurt - the iX (International Exchange) project failed and when the desire for the European central bank to align all the Euro zones trading and settlement systems failed, including the UK's. The hope for UK joining the league of Euro, the vision of monitoring high growth market out of London and Frankfurt were also swiped with this act. Two primary systems playing a vital role in the negotiation process were the Sets of London Stock Exchange, and the Xetra system from Frankfurt.

NASDAQ, on the other end, has taken the advantage of the global model and has a lot to teach us. It's certainly a true real-time, convergence and liberalised model for all of us to learn from. It's moving towards the global trading framework by updating the European IT systems to match its US operations. "THINK GLOBAL AND LOOK LOCAL", who better can set such an example, other than NASDAQ itself. This 8th of June' 2001, the newly created ETS (Electronic Trading system) have gone online within NASDAQ Europe, and its subsidiary, Belgium-based stock market, EASDAQ. With features such as broker-to-broker negotiation, multinational trade price listing, the exchange is all set to move closer to the global act.

Mr. Gregor Bailar, NASDAQ - VP/CIO, mentioned the beginning of an open environment, allowing the traders and investors to share the same information. This is also a major opportunity to establish a number of trading & banking partners. Such as system has opened the doors for other financial organisations looking to establish worldwide trading systems. In addition, this system was designed in India, tested in the US and will certainly open the gates for more real-time assessment for investors, traders and users for more efficient business models to learn and vote for.