Americans don't do irony. If they did, they would appreciate the situation in which Nasdaq, a leading US exchange, now finds itself. According to Bloomberg, it has been caught out in its lobbying in Washington, indulging in the kind of murky behaviour it would not tolerate from customers using its market. One of the regulatory changes designed to minimise the chances of another crash requires securities that are not traded on exchanges to be cleared through a recognised body, so the authorities will have a place where they can get a picture of what is going on.
This clearing of 'over-the-counter derivates' promises to be lucrative and Nasdaq wants a slice for its clearing subsidiary. It faces competition, because the clearing business is dominated by London-based LCH Clearnet, an organisation owned mostly by its customers, who are also the world's leading banks including JP Morgan Chase and Goldman Sachs. Unfortunately, these banks are also Nasdaq's biggest customers, so it did not want to alienate them by suggesting their ownership of clearing houses created potential conflicts of interest and should be restricted. But an anonymous flier was circulated in Congress that made such points and denounced the Wall Street firms as an 'abusive cartel'. Separately, letters were sent from the public making similar points.
Nasdaq has now had to admit it drafted the anonymous circular. The letters have been found to be forgeries and traced to a Boston PR firm, Dewey Square Group. However, a spokesman told Bloomberg the letters were sent by a 'subcontractor' without the firm's knowledge. Meanwhile, Nasdaq's chief spokesman Frank De Maria declined to say whether the exchange had hired the firm responsible for the letters - an odd tactic to adopt. The correct PR response would be to seize the opportunity to clear Nasdaq's name and put distance between it and the forged letters - assuming, of course, the firm is not guilty.
Anthony Hilton is City commentator on London's Evening Standard