NASDAQ: The Fight of Its Life

Robert Greifeld likes to run. "It blows off the tension and gets my mind focused," he says. So he ran a marathon in Ottawa on May 11, and when he reported to work in Lower Manhattan's One Liberty Plaza as the new CEO of the NASDAQ Stock Market (NDAQ ) the next day, he knew exactly what he had to do: By 8 a.m., the top layer of management was gone. Then he started axing a long list of overseas and domestic ventures. Within six weeks, he killed off NASDAQ Europe, an effort to build a European version of the U.S. market that had attracted only 36 companies in five years. He canceled a joint venture with a London exchange to trade stock futures. He shelved plans for NASDAQ's own splashy initial public offering. And he nixed a new system for trading small-company stocks in the U.S. "When Bob came in, there were a lot of fires that needed to be put out," says F. Warren Hellman, whose Hellman & Friedman LLC venture-capital firm is NASDAQ's largest private owner.

The fires aren't all doused. Unbeknownst to all but a handful of insiders and industry players, NASDAQ is fighting for its life. Three years in the crushing grip of an ugly bear have squeezed all stock markets, and NASDAQ's franchise technology stocks have been especially hurt. But NASDAQ's problems run far deeper than others' -- and are largely self-inflicted. Its recent history resembles a Greek tragedy of epic proportions, complete with management miscues, fierce infighting among constituents, costly regulatory misunderstandings, greed, and a big dose of hubris.