Nasdaq’s LaValle: Bitcoin ETF A Turning Point

August 06, 2014 How big a win is it for Nasdaq to get this listing?

LaValle: We certainly view it as a win. The reality is that we believe Nasdaq to be the home of innovation across all of our business channels, ETF listings included. To the extent that the industry and the investing community are viewing this as an innovation in investment product, we certainly feel we’re at the forefront of that. Does it make a difference to retail investors which exchange an ETF is listed on? Should they expect different levels of, say, liquidity or spreads or execution?

Lavalle: That’s a good question. The reality is, given our current market structure, regardless of where your product is listed, it can be traded in several different pools of liquidity. Your access to the marketplace—which broker-dealer you’re using—will really be a greater determinant of where you’re going to get an execution.

But the reality is regulation will dictate that. Your broker-dealer has an obligation to get you the best price in the marketplace, and we’re confident that our broker-dealer partners abide by that. So I think your listing-venue decision has less of an impact on the end investor’s execution quality.

But we do believe that your listing decision will have benefit to the issuer. To the extent that that is beneficial to the issuer, it’s beneficial to the industry, and it can bring more awareness about a particular product, which can broaden the appeal to the end-investor community, and perhaps inform more liquidity and better price discovery. When you look at innovation in ETFs, first came the SPDR S&P 500 (SPY | A-98), and the next big leap was the SPDR Gold (GLD | A-100). How do you characterize the proposed bitcoin ETF as an innovation? Is this another big leap, or are we just facing the risks of overly niche-y exposure?

LaValle: We’ll see what it ends up being, but I think it is positive on both fronts. It’s innovation in the reality that this is a new type of investment, or a new investable asset that’s coming to market in the form of an ETF. It’s also a next step in product generation.

Time will tell how big of an innovation this is, but you’re right: The ETP industry is continuing to evolve by bringing more efficient products to market that are targeting investment opportunities that already exist, and we’re also seeing innovation in the new types of products that are coming to market in terms of what you’re able to access through an ETF.


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