NASDAQ's Official Closing Price to be Used in Annual Rebalancing of Russell Indexes
New York, NY - The Nasdaq Stock Market, Inc. (NASDAQ®) today announced that the NASDAQ Official Closing Price will be used for the first time during the annual reconstitution of Frank Russell Company's 21 U.S. stock indexes. The NASDAQ Official Closing Price will be used to calculate the closing values of the Russell indexes when they undergo their annual reconstitution on June 30.
The annual process to recalibrate Russell indexes to accurately reflect market changes over the year is a significant liquidity event, as investors and money managers trade securities to keep the composition of their portfolios identical to the indexes.
Lori Richards, senior product manager of the Russell indexes, commented: "Russell's use of the NASDAQ Official Closing Price will ensure a more reliable and accurate measure of the index values. It will enable participants to make better investment decisions based on the use of highly reliable index values, which act as an appropriate benchmark for the current capital market environment."
Russell
reconstitutes its indexes annually in order to accurately rank the
3,000 largest companies in the U.S. stock market by market capitalization.
This realignment allows the indexes to provide a truer reflection
of stock market activity and performance.
NASDAQ began calculating the Official Closing Price for all NASDAQ
National Market® and SmallCap securities on April 14. NASDAQ
indices - as well as other major market indices such as those managed
by Russell, Dow Jones and Standard & Poors - use NASDAQ data
for index value calculations.
"The NASDAQ Official Closing Price will give influential index
providers, such as Russell, a vital tool in determining their index
valuations during this important liquidity event," said Adena
Friedman, executive vice president of NASDAQ Data Products. "Index
providers and other users of our data will be provided with another
layer of quality assurance."
The NASDAQ Official Closing Price offers investors a primary market close that is validated and subject to NASDAQ and National Association of Securities Dealers (NASD) surveillance.
Only
trade reports submitted to NASDAQ within two seconds of the market
close are included in the NASDAQ Official Closing Price, a practice
that provides any NASDAQ trade executed at market close an opportunity
to set the NASDAQ-specific closing price. Furthermore, the NASDAQ
Official Closing Price imposes reasonability standards on the closing
price by ensuring that it is at, or within NASDAQ's best bid and
ask quotations. By relying on both quote and trade information,
the NASDAQ Official Closing Price provides a tradable, closing price
without outlying values.
Prior to launching its official closing price, NASDAQ did not designate
an "official" NASDAQ closing price. The last NASDAQ trade
report that was eligible to set the last sale value - and had been
entered into ACT at or before 4:01:30 p.m. - was employed by many
market participants as a de-facto primary market closing price for
NASDAQ securities. Because market participants had 90 seconds to
report a transaction, slowly reported trades had an opportunity
set the closing price.
The NASDAQ Official Closing Price is not to be confused with the
consolidated last sale price, which is comprised of the final last
sale eligible trade report submitted to the Securities Information
Processor (SIP) during the regular trading session by any market
center, including NASDAQ. The NASDAQ Official Price calculation
does not affect the consolidated last sale price or its calculation
in any way.
About
Frank Russell Company
Frank Russell Company, a global leader in multi-manager investment
services, provides investment products and services in more than
35 countries. Russell managers $70 billion in assets and advises
clients worldwide representing $1.8 trillion. Founded in 1936, Russell
is a subsidiary of Northwestern Mutual and is headquartered in Tacoma,
Wash., with additional offices in New York, Toronto, London, Paris,
Singapore, Sydney, Auckland and Tokyo. For more information, go
to www.russell.com.
About
NASDAQ
NASDAQ (OTCBB:NDAQ) is the world's largest electronic stock market.
With more than 3,500 companies, NASDAQ lists more companies and
trades more shares per day on average than any other U.S. market.
It is home to category-defining companies that are leaders across
all areas of business including technology, retail, communications,
financial services, media and biotechnology industries. For more
information about NASDAQ, visit the NASDAQ Web site at www.NASDAQ.com
or NASDAQ NewsroomSM at www.nasdaq.com/newsroom.
Media Contact:
Wayne Lee
301.978.4875