New Fund Launches

In addition to completing the Listing Application, new funds are required to complete a certification prior to receiving approval of an initial listing application. The certification can be found here.

Listing Transfers

In addition to completing the Listing Application, funds switching from another market to Nasdaq are required to complete a certification regarding compliance with SEC Rule 6c-11. The certification must be completed prior to receiving approval of an initial listing application and can be found here.

Nasdaq Listed ETFs

Prior to December 22, 2020, ETFs that are eligible to rely on Rule 6c-11 must certify that 1) the fund is compliant with the conditions of Rule 6c-11 or 2) do not meet the conditions of Rule 6c-11 and are relying on an SEC exemptive relief order that will not be rescinded. The certification can be found here.

Funds listed under Nasdaq Rule 5704 are required to submit an annual certification regarding the funds compliance with Rule 6c-11 during the most recent fiscal year. The certification is required within 30 calendar days of a fund’s fiscal year end. The certification can be found here.

ETFs that meet the definition of “Exchange Traded Fund” in Nasdaq Rule 5704(a)(1)(A) are eligible to be considered for listing pursuant to Nasdaq Rule 5704. ETFs that are excluded from operating pursuant to Rule 6c-11 under the Investment Company Act of 1940 are not eligible to list under Nasdaq Rule 5704.

On or before December 22, 2020, all ETFs that meet the definition of "Exchange Traded Fund" in Nasdaq Rule 5704(a)(1)(A) will need to be compliant with Rule 6c-11. If it is determined that an ETF no longer complies with Rule 6c-11 and therefore no longer complies Nasdaq Rule 5704, Nasdaq will generally issue a letter of deficiency. The ETF will generally be given 45 days to submit a plan to regain compliance. If the plan is accepted, Nasdaq Staff can grant an extension up to an additional 180 days from the date of the original deficiency letter in order for the ETF to regain compliance. If the plan is not accepted or any extension granted by Nasdaq staff expires without compliance being achieved, Nasdaq staff will notify the issuer by phone and subsequently send a delisting letter. The ETP can request that an independent Panel review the Nasdaq staff's decision. More information about this Hearing Process is available here.  

Funds listed under Nasdaq Rule 5704 are required to submit an annual certification regarding the funds compliance with Rule 6c-11 during the most recent fiscal year. The certification is required within 30 calendar days of a fund’s fiscal year end. The certification can be found here.

Yes. According to the SEC, once an ETF becomes eligible to operate under Rule 6c-11 and elects to list on Nasdaq under Nasdaq Rule 5704, the existing order related to that fund (and all other funds under that exemptive order) will be rescinded. Once a fund is listed under Nasdaq Rule 5704, it will not be able to relist under Nasdaq Rule 5705(b) (Index Fund Shares) or Nasdaq Rule 5735 (Managed Fund Shares) unless a new exemptive relief order is obtained from the SEC.

The SEC will withdraw the existing approval order and the fund will become subject to the requirements of Rule 6c-11 and Nasdaq Rule 5704.

The continued listing standards require ETPs listed on Nasdaq to maintain compliance with certain listing standards related to the composition of the ETP's underlying index, portfolio or reference assets on a continuous basis. Previously, these standards generally were only reviewed upon initial listing.  The standards also clarify that issuers of ETPs are subject to Nasdaq's rules requiring prompt notification to Nasdaq when the issuer becomes aware of non-compliance with the listing requirements. The continued listing standards for ETPs are contained in the Nasdaq Rule 5700 series.

An ETF listed pursuant to Rule 5705(b)(3) files a rule proposal requesting relief because it does not meet Rule 5705(b)(3)(A)(i)(a) (90% of the component weight of the index has a minimum market value of $75 million). If the rule proposal is approved, the ETF would thereafter be required to comply with 1) the 19b-4 Representations contained in the rule proposal and 2) the requirements of Rule 5705(b)(3) except for Rule 5705(b)(3(A)(i)(a).

In order to allow Nasdaq to determine an ETPs compliance with the continued listing standards, ETPs are required to submit portfolio or index component data (as applicable) on a quarterly basis based on the fund's fiscal year end or in connection with an index rebalance or reconstitution. All data submissions are due no later than 30 calendar days following the end of the applicable quarter.

Passive ETFs and ETNs: The index component file must be as of a date within 30 calendar days following the end of the applicable quarter OR if the index was subject to a rebalance or reconstitution during the quarter, as of the date of the rebalance or reconstitution.

Active ETFs: The portfolio component file must be as of a date within 30 calendar days following the end of the applicable quarter.

NextShares: The portfolio component file should be as of the date of the most recent publicly available portfolio.

If you have questions, please contact ETP_regulation@nasdaq.com.

Currently, the continued listing standards require that the underlying index must meet the requirements.

Nasdaq will obtain basic index component data (component tickers, identifiers, weights, etc.) from the issuer or the index provider. In instances where Nasdaq does not have additional component data (market value data, volume date, issuer financials, etc.) used in determining compliance, data will be obtained from a third-party vendor. Please contact Nasdaq if there are any issues related to the delivery of basic index component data.

Nasdaq will use data from a third party to determine the total issuer debt and worldwide market value of its outstanding common equity held by non-affiliates. The issuer is the entity that issued the security.

Yes. Nasdaq considers these securities to be exempt securities as defined in Section 3(a)(12) of the Exchange Act.

Nasdaq will generally aggregate Agency MBS components from the same Agency issuer when they have the same rate, term and year of issuance.

Yes. A copy of the current list is available upon request.

Equity

Nasdaq rules allow "U.S. Component Stocks" and "Non-U.S. Component Stocks" to be treated as equities within indices. This includes, but is not limited to, common stock, preferred stock, ordinary shares, and American Depositary Receipts (ADRs).

Fixed Income

"Fixed Income Securities" are defined as "notes, bonds, debentures or evidence of indebtedness that include, but are not limited to, U.S. Department of Treasury securities ("Treasury Securities"), government-sponsored entity securities ("GSE Securities"), municipal securities, trust preferred securities, supranational debt and debt of a foreign country or subdivision thereof." Please see Nasdaq Rule 5705(b)(4).

Securities not specifically mentioned above will be defined on a case by case basis.

A leveraged ETP seeks to provide daily returns that are based on a multiple of the long performance of the underlying index. Because of their structure, these ETPs can perform much differently than expected when held for periods longer than a day. Investors should consult the ETP prospectus prior to investing. The SEC and FINRA have published guidance on investing in these types of products.

An inverse ETP seeks to provide daily returns that are based on a multiple of the opposite performance of the underlying index. Because of their structure, these ETPs can perform much differently than expected when held for periods longer than a day. Investors should consult the ETP prospectus prior to investing. The SEC and FINRA have published guidance on investing in these types of products.

Unlike many ETPs, Leveraged and Inverse ETPs are constructed to provide a stated return on a daily basis. Holding these ETPs for longer than a day significantly increases the risk that the product will not perform as intended. Compounding returns of periods greater than a day could cause the return at the end of the holding period to differ significantly from the expected return.

For example, a fund is designed to track the inverse return (-1x) of an index. Both the fund and the index begin with a value of 100.

Day 1: the index declines 10% to 90. Thus, the fund increases 10% to $110.

Day 2: the index increases 20% to 108. Thus, the fund decreases 20% to $88.

Day 3: the index declines 20% to 86.4. Thus, the fund increases 20% to $105.60.

Day 4: the index increases 20% to 103.68. Thus, the fund decreases 20% to $84.48.

Over the four day period, the index increased 3.68% but the value of the fund decreased 15.52%. While the fund operated as designed, investors could be confused that the decrease in the value of the fund over these four days was significantly different than the simple inverse return of -3.68%. In fact, because of daily compounding, it is actually more than four times lower.

If a listed ETP is going to be redeemed on an early or accelerated basis or liquidated, the issuer should contact Nasdaq staff prior to the public announcement of the redemption or liquidation to coordinate the cessation of trading for the ETP. In determining when to cease trading, Nasdaq will consider, among other factors, the final valuation date, when dissemination of the intraday and closing indicative values will be discontinued, when creation and redemption orders will no longer be accepted, and whether the indicative value will continue to be representative of the product's cash value per share.

Issuers are also reminded to contact the MarketWatch department at least 10 minutes prior to the release of any material information. See this FAQ for further details.