The Nasdaq OMX Group, the country’s second-largest exchange, launched exchange-traded options contracts on the MSCI Emerging Markets Index and the MSCI EAFE Index, serving up additional trading and hedging tools to investors who want to tap into those market segments.
The new contracts are a first of a kind for those indexes, and are designed to provide exposure through cash-settled options that closely track the performance of the indexes. Market participants, including institutional and retail investors, can use the options to implement trading strategies and to improve the process of price discovery, the exchange said in a press release.
The two rollouts are part of Nasdaq’s focus on improving what the exchange calls the “customer’s trading experience” as well as to boost its competitive edge in the derivatives space, Tom Wittman, senior vice president and head of U.S. options for Nasdaq, said in the release.
The MSCI Emerging Markets Index and the MSCI EAFE Index are each free-float-adjusted market capitalization benchmarks focused on emerging and developed markets, respectively.
The first underlies the two largest emerging markets ETFs in the U.S. today, namely the $54 billion Vanguard’s MSCI Emerging Market ETF (NYSEArca: VWO) and iShares’ MSCI Emerging Markets ETF (NYSEArca: EEM), which has some $39 billion in assets.
Similarly, the MSCI EAFE is behind some sizable ETFs that include the $38 billion iShares MSCI EAFE (NYSEArca: EFA) and Vanguard’s $8 billion MSCI EAFE ETF (NYSEArca: VEA).
If CalPERS is taking hedgies out, ETFs may be coming back in.
As valuations grow uncomfortably high, ‘quality’ ETFs makes more sense—if you can figure out just what quality means.
‘Smart beta’ almost surely means loss of more market share for active managers.
Be careful of your assumptions (and headlines!) about volatility ETFs.