In An Effort To Boost SmallCap Liquidity, Nasdaq Proposes Market Monopoly
In An Effort To Boost SmallCap Liquidity, Nasdaq Proposes Market Monopoly
At Monday’s SEC Roundtable on Market Structure for Thinly-Traded Securities, Frank Hatheway, Nasdaq’s chief economist, said “Our markets are no longer able to support small growth companies.”
Hatheway continued, “Concentration on one market would help the markets.”
Nasdaq plans to petition the SEC to allow thinly-traded companies that list on Nasdaq’s main U.S. stock exchange choose whether their shares can be traded on other exchanges. The idea is that this will concentrate trading activity for smaller securities and make it easier for buyers and sellers to find each other.
Currently, there are 13 U.S. stock exchanges, as well as around 40 private broker-run trading venues (dark pools), and regardless of where a company is listed its shares trade on all of them.
Cboe Global Markets, OTC Markets, and IEX Group have all voiced concern over this proposal. The concern is that allowing one exchange to have a monopoly could carry the risk that exchanges would begin charging higher fees for things like market data and exchange connectivity (ultimately hurting smaller investors).
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