The old adage, “go with what you know,” holds true when it comes to evaluating stock prices for the annual Russell Index reconstitution event.
At the end of trading Friday, when the entire family of U.S. Russell indexes was reconstituted, Nasdaq OMX closing prices were used. Approximately 787 million shares representing $21.1 billion were executed in the Nasdaq Closing Cross in 0.4 seconds across some 2,583 Nasdaq-listed stocks.
Effective today, the new Russell indexes valuation go into effect.
Nasdaq official closing prices (NOCPs) determined by the Nasdaq Closing Cross are used by Russell Investments, Standard & Poor’s, Dow Jones, and various mutual funds across the country. The Nasdaq Closing Cross mechanism provides market participants with transparency and consistent prices with the dissemination of imbalances, indicative and likely clearing prices every five seconds via the Net Order Imbalance Indicator. Nasdaq’s INET technology platform processes accurate closing prices for the industry in microseconds.
“We are very pleased that another annual Russell reconstitution has come to a successful and smooth conclusion, thanks to the incredible efforts of our valued exchange partners,” said Ron Bundy, CEO North America Benchmarks, FTSE Russell. “Russell reconstitution is a significant market event and closely watched by investors. And, since we first developed the Closing Cross mechanism with Nasdaq more than ten years ago to facilitate a smooth and orderly close of reconstitution for investors, Nasdaq has been a critical partner to us.”
The Closing Cross brings together the buy and sell interest in specific Nasdaq, NYSE and NYSE Amex stocks and executes all shares for each stock at a single price, one that reflects the true supply and demand for these securities. All nationally-listed securities are eligible for the Nasdaq Closing Cross.
The Russell U.S. Indexes include only common stocks incorporated in the U.S., its territories, and certain countries or regions offering U.S. companies operational, tax, political or other financial benefits. All Russell U.S. indexes are subsets of the Russell 3000 Index, which represents approximately 98% of the U.S. equity market. Russell U.S. Indexes allow investors to track current and historical market performance by specific market segment (large cap/small cap) or investment style (growth/value/defensive/dynamic). Today, more than $5.7 trillion in assets are benchmarked to the Russell indexes.
Russell reconstitution dayis usually one of the most highly anticipated and heaviest trading days in the U.S. equity market as asset managers seek to reconfigure their portfolios to reflect the composition of Russell’s U.S. indexes.
