ETF Q&A: Nasdaq

Alison Hennessy, Head of ETF Listings at Nasdaq, sits down with Danielle Rutsky, Lead Product Manager at Nasdaq, to provide an in-depth review of the 2024 ETF landscape.

2024 was a big year! What was most exciting for you in terms of new ETF developments?

• With over 660 launches from more than 130 issuers, 2024 is another record year in terms of number of new U.S. listed ETFs. We saw 36 new issuers list on the Nasdaq Stock Market for the first time, which is a 40% increase. Partnering with many established issuers, as well as many first-time issuers, on countless innovative ETF launches, has been inspiring. Of all U.S. ETF launches, 5% were focused on cryptocurrency, 28% applied an options or defined outcome strategy, and over three quarters of all launches were active transparent in terms of their management style. As we see the continued growth of unique and advanced strategies utilizing the ETF wrapper, we look to mirror that innovation in issuer support.

How has the growth of ETFs impacted Nasdaq trading volumes and liquidity in recent years?

• Nasdaq continues to be the largest U.S. equity market by trading volume with 13.5% market share. Nasdaq operates the world's largest electronic auction with records of 3.3 billion shares in the 2022 Russell rebalance and crossing 2.9 billion shares in the Russell 2024 event. Nasdaq-listed ETFs have access to this deep liquidity pool and benefit from Nasdaq’s auction order types and mechanics. Nasdaq also operates the largest trade reporting facility at 48.68% of the market. This is important as only about 58% of ETF trading occurred on-exchange for the year. 2024’s largest day for ETF trading on Nasdaq was August 5^th with $59 billion executed.

What technological innovations or infrastructure improvements is Nasdaq pursuing to better support ETF trading and capital markets?

• Nasdaq is always looking to advance ETF industry support. Our first-of-its-kind, customizable ETF data portal, ETF Intel, launched in 2023. Based on 2024 industry feedback, we made significant enhancements such as combining individual market quality data with overall industry trends allowing for powerful peer comparison and trading analysis. We are evaluating additional data and visualizations that we may add to ETF Intel for our premier clients. We are also working on enhancements to our Designated Liquidity Provider (DLP) program to expand support for various types of ETFs and ETFs with lower trading volumes. We are also looking at ways to better enable DLPs to serve in their role throughout this influx of new ETF launches. In our unique role sitting between issuers and DLPs, Nasdaq is constantly developing new ways to improve overall market quality.

What are you most looking forward to in 2025 for the overall ETF ecosystem?  

• With about 35 asset managers having filed with the SEC to offer share classes of ETFs and mutual funds within the same investment vehicle, 2025 could be a pivotal year for the funds industry. Even with these filings, there are use cases where it makes sense for managers to convert certain mutual funds to ETFs, resulting in around 120 mutual fund to ETF conversions so far with even more proposed. End investors tell the industry their preferred strategies, solutions, and ideal method of accessibility. The top 20 ETFs in terms of net flows account for 46% of the industry’s $920 billion inflows YTD. As the industry continues to grow and certain strategies increase in popularity, our team will respond with new ways to support ETF trading, content, and analysis for connecting issuers with end clients.