April 30, 2013

Evolve or die.

Today’s stock markets are under enormous pressure to stay relevant in a world where traders where a global uncertainty grinds on, it’s a global market place where the only certain thing is uncertainty. Markets are moving faster and yet it still takes human beings to stop the computers from doing something stupid. Also, there are dark pools that ignore the call for transparency and where most traders do their business these days.

With this in mind, Nasdaq has recast one of its stock markets for the trading of exchange-traded funds (ETFs) and similar products starting this week.

Nasdaq OMX Group unveiled Nasdaq OMX PSX with the mission to, according to a press release, “introduce incentives for member firms to provide competitive quotes in exchange-traded products and make more shares available to investors.”

"PSX is a key piece of our larger strategy to better service the ETP industry with a platform designed to incent high-quality liquidity, market incentive programs and ETP specific functionality," says Eric Noll, executive vice president of transaction services in the U.S. and U.K. for Nasdaq OMX, in a press announcement.

PSX will take on NYSE Euronext's NYSE Arca, which also focuses on exchange-traded products. In order for the debut to happen, Nasdaq OMX petitioned the Securities & Exchange Commission, saying "that its previous model, which used rules that sought to reward larger orders, was “only marginally successful in garnering market share.""

This has been a rough year for the New York-based market maker. We’re coming up on the one year anniversary of its May 18th Facebook IPO that stumbled spectacularly out of the gate and caused initial shares to stop trading for hours. Along with the embarrassment, the SEC fined Nasdaq to the tune $10 million and it also approved a multi-million dollar payback plan for disgruntled investment firms who suffered due to Nasdaq’s IPO mishap.

If that weren’t humiliating enough, the Nasdaq board voted to rap the knuckles of Nasdaq CEO Bob Greifeld for his mishandling of the much anticipated IPO. Greifeld is seeing his bonus cut 62 percent from the previous year to a paltry $1.35 million.

Nasdaq is trying to prove that it has more tricks up its sleeve.

ABOUT THE AUTHOR
Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining ...