US rival attacks 'bullying' tactics of Nasdaq chief

Nasdaq's chief executive, Bob Greifeld, has been accused of adopting a "reckless, bullying leadership style" and treating customers as "hostages" by one of his leading rivals.

In a letter e-mailed to US traders and analysts, Dave Cummings, the founder and head of the trading platform BATS Trading - which claims to have taken 15 per cent of trading in Nasdaq-listed securities - also savagely criticised Mr Greifeld's hostile bid for the London Stock Exchange.

Mr Cummings said if the Nasdaq failed to win control of the LSE by the end of the week it will go down as "the biggest financial blunder of 2007".

According to Mr Cummings, Mr Greifeld's arguments for taking over the LSE "did not make sense" and he warned that Mr Greifeld would be punished by the hedge funds on the LSE's share register if he tried to sell the Nasdaq's 29 per cent stake in the event that the bid fails.

He added: "The large illiquid position (in the LSE) taken with heavy leverage in a foreign market reminds me of the Long-Term Capital Management debacle." LTCM, a hedge fund, nearly caused a global financial meltdown after its positions, built up with heavy debt, went wrong.

On the subject of Nasdaq's treatment of customers, Mr Cummings said: "A number of people have recounted sales meetings in which Bob led with the slogan 'our customers are our hostages'. If you fight a war on all fronts you lose. No one likes a bully, most people learned that in kindergarten."

Mr Cummings, who stressed the opinions expressed were his own, also accused Nasdaq of alienating customers, a charge the Nasdaq has levelled at the LSE.

Yesterday, he sought to clarify the original letter by saying he apologised "if I have offended Mr Greifeld or anybody else".

However, he repeated his criticism of Nasdaq, saying: "Many would recommend 'a polite and cordial approach' to dealing with our competitors. In general, I try to use that approach with all of our competitors - except one. I single out Nasdaq because I feel their aggressive approach... has bad long-term implications for the broker-dealer community

"I admit my commentary contains a competitive bias, but I sincerely believe that the points made in these e-mails are factual based upon many hours of close observation of Nasdaq as both a competitor and large customer."

On the subject of the LSE, Mr Cummings said: "I criticised Nasdaq's bid for the LSE because I believe it has the effect of eliminating a strong global competitor. I believe the unsolicited nature of the bid will provoke British nationalism. I also wonder if a strong competitor, owned by British broker-dealers, could be created for far less than the price Nasdaq is bidding. Stay tuned..."

Yesterday the LSE repeated its rejection of the Nasdaq offer in its final defence document.

Responding to Mr Cummings comments, a spokesman for the Nasdaq said: "We don't feel inclined to dignify BATS' batty rant with a comment."