Nasdaq CEO sees markets turning by end of 2009

By Karey Wutkowski

WASHINGTON (Reuters) - The chief executive of NASDAQ predicted on Tuesday that stock markets will start improving by the end of 2009, with recovery coming in the middle of 2010.

"Markets will tend to turn six months before the new economy," Robert Greifeld said at the Fortune 500 Forum. "I would be hopeful that at the end of '09 we see markets turning, recovering in mid-'10."

U.S. stock markets have been hammered in recent months, with the Nasdaq composite index losing more than 45 percent of its value this year.

Peter Peterson, the co-founder of Blackstone Group (BX.N), said it is going to take several years before capitalism returns to its prior levels.

"It's going to be longest recession I think we've had in a long time," Peterson said at the event.

Greifeld and Peterson agreed that a lack of regulation and a compensation structure that rewarded excessive risk-taking led to the global credit crisis that has dragged the U.S. economy into a recession.

Greifeld said derivatives to protect firms against currency risk, interest rate risk, and counterparty risk were completely unregulated because policymakers feared that putting restrictions on the products would send them offshore.

"These industries -- and they really are industries -- grew up without any regulation whatsoever," he said.