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The Nasdaq Stock Market, Inc. (Nasdaq:NDAQ) ("NASDAQ(r)") today announced The NASDAQ ETF Market began operating on October 1, 2007. The NASDAQ ETF Market is designed specifically for exchange traded funds (ETFs) and Index Linked Notes (ILNs). The program further strengthens NASDAQ's leadership position in the U.S. ETF sector. In August 2007, NASDAQ captured more U.S. ETF market share than any other U.S. exchange -- with total ETF volume at 52.1%.(1)
"The NASDAQ ETF Market ushers in a new era of trading efficiency for ETFs, particularly during their critical period of incubation," said NASDAQ Executive Vice President John Jacobs. "By providing exceptional levels of liquidity and visibility, The NASDAQ ETF Market helps ETFs develop into established, liquid products. Investors will benefit from the increased competition and greater choice provided by The NASDAQ ETF Market."
"The NASDAQ ETF Market is an important development in the evolution of the ETF family of products," stated Steven Bloom, Senior Vice President, NASDAQ Financial Products. "It underscores NASDAQ's commitment to ETFs and those who invest in them. The NASDAQ ETF Market complements NASDAQ's strengths as a trading and listing venue and a leading designer of indexes."
The focus of The NASDAQ ETF Market is the Designated Liquidity Provider, a Market Maker who has been selected to maintain liquidity in qualified ETFs (i.e., Qualified Securities). NASDAQ requires Designated Liquidity Providers to maintain a higher standard of market quality measured by spread, depth, and time quoting at or near the National Best Bid and Offer (NBBO). They receive price incentives to support ETFs during their period of initial listing, when ETFs need to develop more active trading.
Designated Liquidity Providers are selected by NASDAQ based on factors including experience with making markets in ETFs and ILNs, adequacy of capital, willingness to promote NASDAQ as a marketplace, issuer preference, operational capacity, support personnel, and history of adherence to NASDAQ rules and securities laws.
The NASDAQ ETF Market allows the traditional floor-based specialist, which has historically provided initial liquidity to new ETFs, to play a similar role by placing two-sided quotes in the NASDAQ Market Center. This enables ETF sponsors to continue to have the ability to develop "preferred" relationships with intermediaries. ETF issuers may choose a single Designated Liquidity Provider or multiple, competing liquidity providers. This flexible structure enables ETF issuers and traders to interact based on the needs of the issuer as they vary throughout the life cycle of the ETF.
NASDAQ is a leading index calculator, designer and creator of some of the world's most popular ETFs, including PowerShares QQQ(tm) (Nasdaq:QQQQ) -- the most heavily traded listed equity security in the U.S. and the most active ETF in the world. PowerShares QQQ is designed to correspond to the price and yield performance of the NASDAQ-100 Index(r), the basis of more than 500 investment products in more than 36 countries.
For more information about the NASDAQ ETF Market, please contact Richard Keary, NASDAQ New Listings, at 212.401.8903 or Richard.Keary@Nasdaq.com or NASDAQ Market Sales at 800.846.0047 or sales@nasdaq.com.
