The Nasdaq Stock Exchange has always been an innovator. From its start in the 1970s, when competing stock exchanges were still entrenched in the auction-based system of market specialists, the Nasdaq was electronic. Instead of being connected by floor representatives, buyers and sellers were connected by a sophisticated network of computer terminals. What seemed like a novel idea at the time has become a marketplace norm. Today, the trading of stocks and other financial products has undergone a monumental shift in favor of technology. On any given day, the average share volume of Nasdaq-listed securities outpaces competing markets.
In 1999, when ETFs were still little known, the Nasdaq-100 (Nasdaq: QQQQ) sometimes referred to as “cubes,” became among the earliest funds to begin trading. Today, it’s the most actively traded security in the U.S.
John Jacobs, CEO of Nasdaq Global Funds and chief marketing officer for the Nasdaq Stock Market, has played a key role in the growth and management of Nasdaq and its related business. The “cubes” were launched under his direction and plans for similar products are in the works.
Research sits down with Jacobs to discuss the challenges and opportunities
When investors hear the Nasdaq name, they often think of it as a stock exchange and nothing more, because other parts of your business are less familiar. Besides listing stocks and ETFs, what else does Nasdaq do?
Our business can be separated into a few key segments. First, we list stocks, structured products, closed-end funds and ETFs. Second, we trade those financial products no matter where they’re listed. Third, we sell data. You can’t get real-time price data on Nasdaq-listed securities without coming to us. And, lastly, we’re an indexer, which no other stock market has been able to successfully duplicate. Nasdaq indexes are the benchmark being used with over 400 products in 32 countries.
Where does Nasdaq Global Funds rank in terms of ETF assets under management compared to its competitors?
Our Global Funds division is a subsidiary of The Nasdaq Stock Market and sponsor of five ETFs in the U.S. and one in Europe. The Nasdaq ETF family consists of the Nasdaq-100 Index (QQQQ), the EQQQ [the European version of cubes] and the four BLDRs.
The three largest ETF sponsors in terms of assets under management are Barclays Global Investors, State Street Global Advisors and Nasdaq Global Funds. Our six ETF products collectively are in the neighborhood of $21 billion with the bulk of assets in the Nasdaq-100.
Each of the leading U.S. stock exchanges has an ETF angle. The NYSE and ArcaEx captured the primary listing of 80-plus iShares. The Amex sold the licensing rights to its top ETFs to focus on new product development. How does Nasdaq’s strategy compare to these?
Compared to the competing exchanges, I think we have the most comprehensive strategy.