The Nasdaq will launch a market segment designed specifically for exchange traded funds and index linked notes. The Nasdaq ETF Market will be implemented in the third quarter.
The Nasdaq Stock Market, Inc. ("NASDAQ")(r), (Nasdaq:NDAQ) today announced it will introduce The NASDAQ ETF Market, a market segment designed specifically for exchange traded funds (ETFs) and Index Linked Notes (ILNs). The program will further strengthen NASDAQ's leadership position in the U.S. ETF sector. In May 2007, NASDAQ captured more U.S. ETF market share than any other U.S. exchange -- with total ETF volume at 54.1%.(1)
The centerpiece 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 will require 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 will receive price incentives to support ETFs during their period of initial listing, when ETFs need to develop more active trading. Designated Liquidity Providers will be selected through a consultative process between ETF sponsors, market-making firms and NASDAQ.
"The NASDAQ ETF Market will complement NASDAQ's existing strengths by assisting ETF sponsors during the incubation phase of new ETFs, providing the liquidity and visibility for these ETFs to grow into mature, accepted products," said NASDAQ Senior Vice President William O'Brien. "The market reflects the historical relationships between ETF issuers, brokers and exchanges and raises it to a new level of efficiency. ETF investors will ultimately reap the benefits of this initiative through greater choice and more robust competition."
"We're excited that NASDAQ is creating this new trading platform," stated Greg Friedman, Managing Director, Head of iShares Product Management and Strategy for Barclays Global Investors. "It's an important next step in the growth of the ETF market and shows NASDAQ's commitment to ETFs and the investors who utilize them. We believe investors will benefit from the support of dedicated market makers that actively provide liquidity through the NASDAQ Market Center."
The NASDAQ ETF Market will allow the traditional floor-based specialist, who has historically provided initial liquidity to new ETFs, to play a similar role by placing two-side 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.
In 2004, 2005 and 2006, NASDAQ won the "Largest Exchange for ETFs" in the Americas award, presented by Exchangetradedfunds.com Inc. -- a leading provider of information about ETFs. These awards were based on third party statistical evaluation.(2)
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.
On June 19, 2007, NASDAQ submitted proposed rules to the Securities and Exchange Commission (SEC) pertaining to Designated Liquidity Providers and Qualified Securities. They were effective immediately upon filing. The NASDAQ ETF Market will be implemented in the third quarter of 2007.
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 firstname.lastname@example.org.
The Nasdaq Stock Market, Inc. is the largest U.S. electronic stock market. With approximately 3,200 companies, it lists more companies and, on average, its systems trade more shares per day than any other U.S. market. NASDAQ is home to companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology. NASDAQ is the primary market for trading NASDAQ-listed stocks. For more information about NASDAQ, visit the NASDAQ Web site at http://www.nasdaq.com or the NASDAQ Newsroom at http://www.nasdaq.com/newsroom/.
Cautionary Note Regarding Forward-Looking Statements
The matters described herein contain forward-looking statements that are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to statements about the NASDAQ ETF Market program and related NASDAQ strategic initiatives. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ's control. These factors include, but are not limited to factors detailed in NASDAQ's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.
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