With the recent news about the Federal Reserve and Congress taking action to maintain the U.S.'s financial plumbing, it's easy to forget that exchanges are among the most important financial infrastructure out there. Between the massive sell-off in the equity markets and some of the issues in the commodities markets, those exchanges are being put to the test. If you had to buy one for your portfolio, which one would you choose?
Nasdaq (NASDAQ: NDAQ) is one side of the U.S. stock market duopoly. Intercontinental Exchange, which owns the New York Stock Exchange, is the other. Nasdaq earns revenue through fees and clearing charges, and it licenses its data to trade platforms and news services. Nasdaq also operates a couple of other ancillary businesses.
In the U.S., Nasdaq operates three cash equity exchanges and six electronic options exchanges. In Europe, it operates the stock exchanges in Sweden, Denmark, and Finland. The company also has exchanges in Iceland and the Baltic states. Nasdaq's main business is cash equities trading, which is basically day-to-day stock trading. Market services (trading and clearing) constituted 36% of revenue in 2019, followed by information services (data) at 31%, and corporate services (capital markets and consulting) at 20%.