New York Stock Exchange To Offer Exchange Traded Funds

by Carla Johnson, InvestorsOffshore.com

10 April 2001

The New York Stock Exchange (NYSE) has announced that it will begin trading exchange-traded funds (ETFs) on the basis of unlisted trading privileges.

An ETF is a basket of stocks designed to track the performance of an index and can be bought and sold like an equity security. It can be traded anytime during normal market hours and is priced intra-day so investors know the value of their investments. Regulatory rules allow for securities listed on any national exchange to be traded by other exchanges.

It is expected, although not yet confirmed, that targeted stocks listed on the London Stock Exchange, Deutsche Borse, and the Tokyo and Hong Kong stock exchanges will be included but the ETFs won't be available until sometime next year.

ETFs have gained in popularity, becoming the latest trend to interest many fund companies as an alternative to traditional index mutual funds. NYSE Chairman and CEO, Richard A Grasso, explained: 'The addition of these products to the NYSE will open them to the deepest pool of liquidity in the world. This will enhance the product's desirability to both institutional and retail customers.'

The aim of the NYSE, says Mr Grasso, is to 'trade ETF products, such as the Nasdaq 100 Trust, Standard & Poor's Depositary Receipts and Diamonds Trust, that are listed on other markets and not the individual companies that are in the underlying index and may not be listed on the NYSE.'

Recommended