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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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January 2, 2007

Nasdaq's Select' Plan, Facing Complaints, Goes Back to the Drawing Board

By Peter Chapman

Nasdaq is reworking its proposal to publicly rank market makers based on the quality of their quoting and trading.

The plan, dubbed the "Select Market Maker Program," ran into opposition from dealers when it was proposed in July. It was slated to launch this quarter.

Chris Concannon, Nasdaq's executive vice president for transaction services, acknowledged recently that the proposal is "controversial" and that Nasdaq is "making some slight modifications based on [dealer] feedback."

The data, Concannon told attendees at the annual Security Traders Association confab, is intended for issuers.

"It is not a best-execution selection program," he said. "It is simply an issuer program."

Nasdaq's original plan was to pass judgment on the quality of dealers' markets and the amount of trading they did, and to make that information available to issuers and order senders.

Some market makers felt Nasdaq was overstepping its bounds and opposed its making that kind of information available to order senders (See Traders Magazine, September 2006).

Concannon said the information would be accessed by issuers' chief executives, chief financial officers and investor relations officials through a Nasdaq website.

"We have 3,300 companies," Concannon said. "They want to know what is going on in their stock and who is trading it. The Select Market Maker Program is an attempt to identify the market makers that are true liquidity providers in the stock for our issuers to talk to. The program will be marketed directly to the issuer."