What happened

Nasdaq Inc. (NASDAQ: NDAQ), the company that owns the Nasdaq Composite Index and the Nasdaq Stock Exchange, had a better month than the index, according to S&P Global Market Intelligence. 

Nasdaq Inc. returned 18.6% in July, beating the S&P 500, which was up 9.1% for the month, and the Nasdaq Composite, which gained 12.4% in July. The company's stock is down 15% year to date as of today, beating the Nasdaq Composite, which is down 21% so far in 2022.

So what

The primary catalyst for Nasdaq in July was its second-quarter earnings report, which showed a 10% year-over-year gain in revenue to $1.5 billion and a 6% rise in net revenue to $893 million. In addition, adjusted earnings per share (EPS), taking out gains in the prior year from divestitures, was up 9% year over year to $2.07.

All four of its business segments saw revenue gains, led by Market Technology (solutions for institutional investors in trading and settlement, and financial-crime deterrence, among other areas), which was up 12%.

Corporate Platforms -- encompassing index listing services, as well as investor relations and ESG (environmental, social, governance) services -- was also up 12% year over year. 

The largest segment, Market Services, which includes revenue from trading on the exchange, was up 11%. Investment Intelligence, which generates revenue from market data and intelligence and licensing its indexes, saw an 8.5% spike in revenue year over year.

The growth of its businesses outside of Market Services gives Nasdaq not only multiple revenue streams and growth opportunities, but also diversity in the types of revenue it generates. The company has increased its amount of recurring revenue from subscriptions, particularly within the Market Technology segment, via its software-as-a-service (SaaS) offerings. Revenue from SaaS rose 12% year over year and makes up 35% of recurring revenue.

Now what

The other big driver for Nasdaq was the finalization of a planned 3-for-1 split. It was first announced in April, and in July it was approved. After Aug. 12, every shareholder will get two additional shares of the stock, currently about $177 per share, for each share they own. The new shares will be given out on Aug. 26, and the stock will begin trading at the new split-adjusted price on Aug. 29.

The idea is to make the stock more accessible to more investors at a lower entry price, thus boosting liquidity. The market reacted to the move with approval, as the price jumped sharply on the news when it came out on July 20. There are a bunch of high-profile stock splits coming on the Nasdaq exchange, and that is generally good for Nasdaq Inc. as it creates more trading activity. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why did the Nasdaq share price rocket 19% in July? appeared first on The Motley Fool Australia.

A request was submitted in December 2020 regarding the board diversity policy that Nasdaq can set for the businesses trading on its exchange.

The Wall Street Journal reports that Nasdaq will have to wait until August (at the latest) for the SEC's ruling regarding its request.

Why does Nasdaq want more board diversity?

According to the WSJ, Nasdaq wants more women, racial minorities and LGBT individuals on its boards. If a company's board cannot meet the requirements, Nasdaq wants public disclosure of why it cannot.

The exchange has set board targets that include at least one woman and a director that identifies as a racial minority or lesbian, gay, transgender, bisexual or queer.

Following a recent audit of its boards, Nasdaq discovered that more than three-quarters of its listed companies do not meet its envisioned diversity metrics. This resulted in pursuing the SEC to update the exchange's rules.

Why is the SEC dragging its feet?

Last month, 12 Republican members of the US Senate Banking Committee wrote a letter to the SEC expressing concerns over the Nasdaq proposal.

The SEC claims that it has delayed the process due to the complexity of the request. By deciding to "institute proceedings", the SEC automatically receives a 90-day extension for the outcome. This can be further extended by another 60 days, which is what takes us to August 2021.

If the SEC accepts the proposal, all Nasdaq listed companies will have to disclose board diversity statistics within twelve months.

Foolish Takeaway

Variety is the spice of life. Many businesses are already considering how diverse the group is and why it's important to have an assortment of professionals steering the ship. This comes as part of the general corporate and social responsibly (CSR) movement.

Nasdaq has taken a significant position with its SEC request. We'll be waiting to hear about the outcome and what it will mean for the market.

The post Nasdaq wants its boards to be more diverse appeared first on The Motley Fool Australia.

The proposal sent to the US Securities and Exchange Commission on Wednesday Australian time would see mandatory inclusion of one female board member on each company, plus another who is in a racial minority or is an LGBTQ person.

Companies that do not meet those rules could get kicked off the NASDAQ.

NASDAQ is the second largest share market by market capitalisation in the world. 

Giants like Microsoft Corporation (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN) and Tesla Inc (NASDAQ: TSLA) all live there.

More than 75% of its listed companies would not meet the requirements of its new proposal, NASDAQ found.

Will the ASX also mandate diversity in Australian boardrooms?

An ASX Ltd (ASX: ASX) spokesperson told The Motley Fool the local bourse would concentrate on getting its listed companies to be transparent, rather than mandating particular values.

"ASX's focus is on disclosure and ensuring that investors have information about the corporate governance practices of companies to make informed investment decisions."

The ASX spokesperson said that the exchange's Corporate Governance Council has a guideline stating all companies should "set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally".

There are no clauses relating to ethnic minorities or LGBTQ representation.

"Under Listing Rule 4.10.3, ASX listed entities are required to benchmark their corporate governance practices against the Council's recommendations and, where they do not conform, to disclose that fact and the reasons why," said the ASX spokesperson.

"It is for the market to pass judgment on whether it thinks the practices adopted by the company are appropriate or not."

The Corporate Governance Council is made up of 19 business, shareholder and industry representative bodies.

Why the same people are on all the boards

Despite the ASX's reticence, investor groups have called for greater diversity on boards. Critics have said the same people merely switch between Australian boardrooms.

"It is still social connections that drive board appointments," former independent NRMA director Richard Talbot wrote on SMH.com.au.

"It's a small gene pool with few outsiders. It leads to 'group think', under which directors become more concerned with being liked and connected. In Sydney, they cluster in the eastern suburbs. They go to the same schools, then mix with the same people in legal firms and big accounting firms."

In October, 9 major institutional shareholders — HESTA, Aberdeen Standard Investments, BlackRock Australia, Ellerston Capital, Fidelity International, First Sentier Investors, IFM Investors, Pendal Group and WaveStone Capital — started the 40:40 Vision campaign.

The program will push for all S&P/ASX 200 Index (ASX: XJO) companies to have 40% female representation in executive roles by 2030.

HESTA chief executive Debby Blakey said at the current rate it would be 80 years before equal gender representation would be seen at the CEO level.

"We see lack of gender diversity in leadership as a financial risk," she said.

"Companies that fail to consider 50% of the population for leadership positions risk missing out on the best people and the performance of the organisation will eventually suffer."

The post Will ASX kick out companies that don't have board diversity? appeared first on The Motley Fool Australia.