The Russell Reconstitution takes place once a year in June and it is one of the most highly anticipated and heaviest trading days in the U.S. equity market as asset managers seek to reconfigure their portfolios to reflect the composition of Russell's U.S. indexes. Approximately $8.5 trillion in assets are benchmarked to the Russell Indexes.
“We work all year up to this point,” Ron Bundy, CEO of North America Indexes at FTSE Russell said. “At the last second of trading, all the buys and sells of the Russell Indexes will come together under the new reconstituted index. That’s important for investors because when we reconstitute the index, it updates everything. It’s really the most accurate and reflective series of benchmarks for U.S. equities.”
The Nasdaq Closing Cross was used for the 14th consecutive year to rebalance Nasdaq-listed securities in the entire family of Russell U.S. Indexes. More than 972 million shares representing a record $28.9 billion were executed in the Nasdaq Closing Cross in 0.861 seconds across some 2,499 Nasdaq-listed stocks. The previous record for dollars traded at the Cross in a Russell reconstitution was $21.1 billion in 2015.
“Nasdaq has a great technology foundation,” Bundy said. “It has spent years perfecting this process just so that it is as predictable and reliable, and gives investors peace of mind knowing that they will get the same price discovery at the end of the day just like the large institutions get. It’s an outstanding mechanism for us to help with our transparency and really help bring the Russell Reconstitution to a close.”
Nasdaq continuously invests and innovates the Closing Cross to ensure a reliable trading environment for market participants. As part of our commitment to provide a Closing Cross that the market can depend on, and based on collaboration with our clients, we will be announcing enhancements to the Closing Cross (expected to launch in Q3 2017) that will encourage greater interaction opportunity, improved transparency, and support stability in the price discovery process. Stay tuned for details.
To learn more about the Russell Reconstitution and Nasdaq Closing Cross, check out this video as Bundy joins Jill Malandrino at the Nasdaq MarketSite.
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