Commentary

Jared Dillian
Traders Magazine Online News

Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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June 30, 2001

Nasdaq's For-Profit 'Disclosure' Boo-Boo

By Gregory Bresiger

Nasdaq has just failed at a money- making opportunity.

The Nasdaq Resource XQ has been scrapped, Nasdaq sources said. It made the decision after deciding that "it would not be a viable business opportunity." The service has been intended to help market-making firms comply with the Securities and Exchange Commission's new 11Ac1-5 rule, which detailed monthly reports detailing execution quality.

That new rule is set to take effect at the beginning of August. However, Nasdaq officials had been working with the SEC to provide an exemption for smaller firms.

The basic reason why Nasdaq Resource XQ failed: Very few firms signed up for it. Also, several firms are planning to offer a similar service. Among them are Market Systems (MSI) and Transaction Auditing Group (TAG).

Nasdaq sent an alert to traders offering to help to make the transition to another service. "It just didn't make sense for our business plan," according to a spokesman for Nasdaq.

Meanwhile, small firms are finding that complying with Exchange Act Rule 11Ac1-5 is going to be "burdensome" and difficult for market makers, especially smaller ones, to comply with. Those were the results of a survey taken by Nasdaq and formally submitted to the Securities and Exchange Commission.

Nasdaq was joined in its request for an exemption for small firms by the National Association of Securities Dealers Small Firms Advisory Board [see Special Feature, p. 29].