Nasdaq Cuts Fees on Closed-End Funds

In the continuing battle of the boards, the Nasdaq(NDAQ) fired another salvo at rival exchanges today by dropping its listing fees for closed-end funds.

Nasdaq says the new entry fee for listing a closed-end fund is $5,000, down from a previous range of $100,000 to $150,000. Annual fees now range from $15,000 to $75,000, depending on the number of total shares outstanding. Annual fees may not exceed $75,000 per fund family. Prior to the changes, each fund listed on Nasdaq was assessed a separate annual fee and the range for annual fees was $24,500 to $75,000.

A total of nine closed-end funds currently trade on the Nasdaq, compared with 148 at rival Amex. According to the closed-end fund center, 694 closed-end funds trade across U.S. exchanges, with net assets totaling $210 billion.

The Nasdaq's fees are now in line with those charged by the Amex, except that Amex caps its listing fees at $30,000, while the Nasdaq caps at $75,000.

The 2005 annual fee for one of its largest funds, the $900 million MCG Capital (MCGC), was $34,500. Under the new plan announced today, MCG will pay $22,000 in 2006.

Closed-end funds listed on securities exchanges are actively managed and trade intraday on the open market. They typically trade in relation to, but independently of, their underlying net asset values, or NAVs. That means that unlike open-end mutual funds, shares of closed-end funds can trade at premiums or discounts to their underlying NAVs -- a feature that many investors find attractive.

"These lower fees permit Nasdaq to compete more effectively for listings with other markets and we expect this more intense competition to benefit investors," says Bruce Aust, executive vice president of Nasdaq's corporate client group.