- 2 months ago
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00:00So let's talk about just how many ETFs have launched this year. We were talking about all the money coming into ETFs, but you consider that just in the U.S. alone, more than 900 products have launched year to date.
00:11When it comes to the exchanges, you really have three. You have NASDAQ, of course, the New York Stock Exchange, and SIBO.
00:17How do you compete with your peers for a share and a greater share of those listings?
00:22Yes, you talked about record year for launches. We're going to be well over 1,000 end of year.
00:26Last year was a record, and we continue to break all these new records, and you see all the registration statement coming in.
00:32So there's more on the horizon there. I mean, from a NASDAQ standpoint, I know we compete significantly from ETF listings.
00:39We really work to be a good partner to our issuers to really help them get the opportunity for their new launches to really grow and thrive and trade efficiently.
00:48And talking about the 950 that launched this year so far, we've listed over 300 of those.
00:53We just surpassed 1,000 listings in the U.S. for NASDAQ.
00:56So you're really seeing significant growth in the pipeline that we have.
01:00And I think there's really three key areas about how we're competing.
01:04First is around that brand alignment with our issuers.
01:06Like NASDAQ is known for our leadership in technology, our leadership in innovation.
01:11So are ETF issuers. So people come to us because of that alignment we have with issuers.
01:15Second is around the liquidity that is on NASDAQ.
01:18We are the largest single pool of liquidity for U.S. equities.
01:21We are the largest U.S. options exchange.
01:23So you're listing your ETFs on that really deep and resilient market that is NASDAQ.
01:28And then third, it's about how can we support our issuers for investor education, for distribution, and really global amplification for their ETF.
01:36Because as you know, it's very competitive.
01:38It's easy to launch, but it's a very competitive market for ETFs.
01:41Then you have the mutual fund share class coming through that might increase the number of ETFs available as well.
01:46How do you prepare for something like that?
01:48Because there are some concerns that perhaps the ETF space needs more market makers.
01:52And that will only become a bigger deal as those mutual fund conversions come through and as more crypto ETFs list, too.
01:59What do you think?
01:59Yeah, I mean, definitely a lot of opportunities in product development.
02:02So, you know, as you talk about mutual fund as an ETF share class, 80 flat filers in front of the SEC.
02:08So, you know, we know the SEC had published their intent to approve the dimensional fund advisor, exemptive relief.
02:14So that's going to open, really lay the foundation for more approval as the government reopens.
02:19So, you know, there's definitely an opportunity for even more products as we understand that with the share class,
02:25there's still operational and distribution consideration to be worked through.
02:28But once that's been streamlined, you know, could that open up even more launches going forward?
02:34So from our side, you know, we already list over 20 of the Vanguard ETFs that are share class of their mutual funds.
02:40So we're very experienced in supporting issuers in this share class effort.
02:44We've also filed with the SEC to amend our listing rules to make the listing process for these share class products as seamless as possible.
02:53And then from a market maker standpoint, Scarlett, as you mentioned, you know,
02:56how do we ensure that the market makers are there and incentivized to continue to provide liquidity in these ETFs?
03:01And we can so we have been making a lot of initiatives and working with issuers and market participants to enhance these liquidity programs
03:08that NASDAQ has to really adapt to the times and, you know, really focusing on market quality and liquidity in the ETFs.
03:15So let's talk about that because the ETF industry, as you know, is opportunistic.
03:20So we've got Bitcoin and we've got stock ETFs, but they're going to try to push the envelope.
03:25We're going to have meme coin ETFs.
03:27We're going to have possibly 3x ETFs, right?
03:30Is there a point where you just like we can't do that?
03:33Because there is this competition between you, SIBO and NYSEE for listings and you each kind of have an identity.
03:41And I'm just curious how that works of whether there is a filtration process.
03:46I mean, we are a self-regulatory organization and we take that duty very seriously.
03:50So every single listing application that is submitted to us is reviewed by our listing qualification team, by our legal and compliance team.
03:57So we want to ensure that, you know, everything we list,
03:59we keep in mind investor protection and market resiliency of both the trading and also the product resiliency of it.
04:05So we work very closely with the issuer and also with the SEC to ensure that the proper disclosures are in place,
04:13the, you know, the proper information and that is outlined in the registration statements are there.
04:18And then it goes back from like once if it does meet all these criterias and is greenlit by the SEC,
04:23working with the market makers to ensure the trading of them is seamless.
04:26Would you ever say no to an ETF?
04:29Because there's a lot of concern about there about just how leveraged things could become.
04:34You think about some of the potential five times leveraged products that have been proposed.
04:38I mean, is there a certain point where NASDAQ would say these are irresponsible products,
04:44make a judgment in that way and not list an ETP?
04:47How about an example?
04:485x Dogecoin ETF.
04:50Do you list it?
04:51So we do have listing rules that, you know, so we would really look to see how these products fit within our listing rules.
04:58And then we would also engage with SEC.
05:00You know, these are new and novel products that have been filed.
05:03You know, you mentioned this optimism about the government reopening.
05:05So we're also looking forward to that so that they can resume their vital role in reviewing, providing feedback for these products
05:11so that, you know, we're understanding of the guidance of where some of these guardrails are
05:17and where are some of these thresholds that they're willing to see and bring products to market that way.
05:24There are listing rules for ETFs.
05:25There are also rules for inclusion in the NASDAQ 100.
05:28And I realize that as head of the U.S. equities over at NASDAQ, I'm curious about how a lot of foreign companies want a listing in New York
05:36so that they can be on the NASDAQ and one day be included in the NASDAQ 100 and therefore be bought up as part of the queues.
05:42How do you think about the parameters of NASDAQ 100?
05:46Yeah, I mean, companies do look into the U.S. as, you know, the robust capital formation and infrastructure that we have to raise capital
05:53and broaden their distribution in the U.S. market.
05:56You know, as you mentioned, we operate the NASDAQ 100 index and my colleagues on our index team,
06:01you know, we have a very robust methodology to evaluate what companies are going to be added and removed from the index at each rebalance.
06:08You know, really looking at, you know, different metrics about liquidity, market cap.
06:13And so it's definitely very important market index that is out there.
06:17And, you know, as companies that are added to the index, you definitely do see that it provides more liquidity into the ETFs.
06:24You know, it's a benefit to be added to these index.
06:27But, you know, that's not the only reason people are in a state on NASDAQ, right?
06:29It's, you know, all the benefits about, you know, the market infrastructure we have, the liquidity we have, and the reach that we have to support issuers.
06:37Okay, let's talk tokenization.
06:38This is the one thing that's maybe up and coming and like, oh, my God, our ETFs are a threat.
06:42We have to change the show to token IQ.
06:45We'll see.
06:45Oh, my God.
06:46But I'm bearish versus the hype.
06:48I think these are just overhyped.
06:50Blockchain will help efficiencies in the plumbing of Wall Street.
06:53But are you planning for, like, tokens to be listed?
06:57And we're all going to be having wallets and tokens.
07:00Is that the future?
07:00Yeah, I mean, we definitely see benefits to tokenization.
07:04You know, Eric, as you mentioned, operational efficiencies, more streamlined of workflow.
07:08So, you know, we can see that benefit also translate to the ETF wrapper.
07:11You know, in our conversations with our clients, tokenization can provide global, like, more distribution reach.
07:17Can it lower costs to their investors because of these operational efficiencies?
07:23So there are definitely a lot of benefits to the technology.
07:25And when we surveyed the market community, as well as our issuers and our clients, there's some concerns when it comes to the technology about liquidity fragmentation, pricing discrepancy.
07:37Do you know what you own when you own the token?
07:39So, you know, those are all areas that we want to address when we are supporting this technology.
07:44So NASDAQ, in fact, actually filed to offer trading of tokenized securities, both equities and ETF, on our NASDAQ markets under the NASDAQ market infrastructure.
07:54So, you know, for us, it's addressing a lot of that.
07:58So it will be traded under the same QSIP, same ticker, same order pool, our NASDAQ.
08:03And it's really about the indication when you're submitting the order, whether you want it settled in token or share form.
08:08So allowing investors to take an initial step in realizing the benefits of tokens, but still doing it in a framework that has investor protection at the core.
08:17Well, let's definitely keep in touch on that point.
08:19But before we let you go, and we don't have a lot of time left, we were talking about ETF share classes, the potential that we start to see some of those ETF share classes of mutual funds be listed in the new year.
08:30I know that, of course, NASDAQ has experience with some of the Vanguard share classes.
08:34But that being said, we could see hundreds of new products get listed across exchanges.
08:40And with that in mind, is NASDAQ hiring more headcount?
08:44Are you potentially getting in touch with more market makers in anticipation of that rush?
08:48Yeah, definitely.
08:49I mean, we are staffing up a team to really ensure that depth.
08:52So we actually had a newcomer join our team Monday.
08:54So thank you for letting us announce that.
08:56And we're actually going to put out more headcount on the business side in the coming weeks.
08:59We're also staffing up from a legal and compliance standpoint as well, because we want to make sure that we're never the slow point in the listing process.
09:08Whenever we come to market, we're going to be able to support the issuer's timeline for launch.
09:13So we step up there.
09:14We really focus on our marketing and activation capabilities as well.
09:18So those are things that we focus on.
09:19We talked a bit about enhancing our liquidity programs, but also our data and reporting is something that we really have built up for our customers as well.
09:27So definitely a lot of investment into the business, and we're excited about that.
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