The National Association of Securities Dealers is splashing $10 million on television commercials that encourage investors to trade more Nasdaq stocks.
A small cash windfall for CNBC and CNN? Nope. ABC perhaps? Nope.
The money, in fact, is paying for spots broadcasted by London-based networks in the U.K. as part of an aggressive effort by Nasdaq's international team to build itself into a supranational stock exchange.
Nasdaq Commercials
"Our research shows that advertising considerably stimulates awareness among retail investors who have not traditionally traded U.S. equities," trumpeted Charles Balfour, senior vice president of Nasdaq's 20-person international outpost in London.
Balfour and his team carefully helped to select the spots. Some of the dollars were spent on commercials sandwiched between a live broadcast of the Super Bowl. More went on breaks between shows that attract London's yuppie community.
The advertisements, which first aired in September, emphasize Nasdaq's technology-heavy listings, and showing viewers shots of Microsoft and Intel. Appetites whetted, viewers are then reminded that more information is available on Nasdaq's website, www.nasdaq.com.
About 18 percent of investments in Nasdaq, most of it institutional, come from outside the U.S. But market research conducted by Nasdaq indicates an untapped market in the U.K. for direct investments in the U.S. stock markets.
Holding back the growth, however, are transaction costs. "Trading out of London is still cost prohibitive," Balfour lamented. "An investor here typically goes to a U.K. broker or U.K. bank, who then goes to a U.K. broker, who then goes to a U.S. investment bank in London, who finally passes it to a U.S. investment bank in New York."
"The whole process," he added, "comes back with considerable costs, including foreign exchange costs."
U.K. advertising is aimed directly at increasing demand for Nasdaq stocks. Increased demand, in turn, would make it more attractive for U.K. brokers to improve Nasdaq dealing services, further driving demand for Nasdaq stocks among U.K. investors.
Indeed, Nasdaq is working with some of the top U.K. stock brokers, including Barclays and NatWest Securities, about launching a share-dealing service on the Internet.
Some investors in the U.K., in fact, already deal directly with the U.K. affiliates of U.S. discounters. Said Balfour: "U.K. investors can now go onto our web site and see just how easy it is to get information on Nasdaq stocks and deal directly with one of the houses here with Internet services, such as Charles Schwab & Co."
