Nasdaq Proposes Letting Companies Decide Where Their Shares Trade

Nasdaq Inc. said it will ask regulators to let it give thinly-traded companies that list on its main U.S. stock exchange a choice as to whether their shares can be traded on other exchanges, with the aim of making it easier for investors to buy their stock, according to a story in Reuters news. There are 13 U.S. stock exchanges and currently, regardless of where a company is listed, its shares trade on all of them; they also trade on around 40 private broker-run trading venues. Critics say this fragments trading activity, making it more difficult for buyers and sellers to find each other. Allowing smaller companies to concentrate the trading of their shares on a single exchange would create trading efficiencies and force listing markets to compete more vigorously to list and trade the shares, executives from Nasdaq told the SEC. “Our markets are no longer able to support small growth companies,” said Frank Hatheway, Nasdaq’s chief economist, referring to the U.S. markets overall. He was taking part in a roundtable discussion hosted by the SEC in Washington on the topic of improving the markets for thinly-traded companies. Of the 13 U.S. stock exchanges, 11 are owned by either Intercontinental Exchange Inc’s NYSE unit, Nasdaq, or Cboe. One of the remaining two is in the process of being bought by NYSE. IEX Group, which runs only one exchange, recommended to the panel giving thinly-traded companies the option of having their stocks trade on one exchange per exchange group, which would mean a stock would trade on four exchanges instead of 13. In October, the U.S. Treasury Department recommended that the SEC allow companies to decide how many stock exchanges their shares trade on as part of a broader regulatory review. The SEC is seeking public comment on the issue.