The early results are in. Needs more time.
For those of us watching the proposals to enhance market making in exchange-traded products, time to consider the Nasdaq Stock Market and NYSE Arca plans has been extended.
While the Nasdaq proposal received 17 comment letters of varying degrees of support and refusal, the program proposed by NYSE Arca has thus far garnered just 2 comments. Sure, many of those who already commented on Nasdaq—filed earlier—may have said their piece, but the two commenters who came back for more on the NYSE Arca program are significant.
In one corner is the Investment Company Institute, which generally represents the interests of mutual funds. In the other corner is The Vanguard Group, the largest ICI member by mutual fund assets.
As I’ve mentioned before, NYSE Arca is home to the vast majority of exchange-traded product primary listings, but not necessarily the vast majority of ETP trading. In fact, it’s third after a reporting facility run by FINRA and then Nasdaq, according to XTF.com.
Industry comments surrounding the Nasdaq proposal were encouraging. Even Vanguard effectively abstained from a view.
As for the NYSE Arca proposal, ICI had some questions but still “strongly supports” a pilot to test the NYSE’s proposal.
Vanguard, not so much.
“We do not support the Proposal as currently structured,” reads the letter from Vanguard Chief Investment Officer Gus Sauter. This is quite a rebuke from a company advising 48 exchange-traded funds listed on NYSE Arca
While it’s possible that more comment letters may come in on the Arca proposal, this disagreement alone should mean back to the drawing board.
Over the course of the next few weeks, I’ll be digging into this deeper on ETFolution at Forbes.com.