Nasdaq Stock Market
got its foot in the door of the shorter-ticker club.
Securities and Exchange Commission
this week approved the Nasdaq's request to list companies with three-letter ticker symbols under certain circumstances. The move is limited, but could aid the exchange in its bid to lure listings from rival
When the all-electronic Nasdaq got started back in 1971, its stocks traded under tickers with four or five letters, to differentiate its stocks from those traded on an exchange staffed by floor traders. Any investor could see that
, with one to three letters, were exchange-traded stocks, while
, with four letters, were Nasdaq stocks.
But the distinction has been fading as electronic trading networks have sprung up and the NYSE increasingly moves to electronic trading itself. And earlier this year, the SEC took a step toward breaking the mold altogether by allowing
to jump to the Nasdaq from the American Stock Exchange with its three-letter ticker intact.
While it was a special case, the Nasdaq used the case as a launching pad to argue that there was no reason why all companies with three-letter tickers couldn't jump exchanges without changing their tickers.
Bill O'Brien, Nasdaq's senior vice president of new listings, sees so-called ticker portability as another weapon in the listings war. He says Nasdaq's annual listing fees can be as much as $400,000 below that of the NYSE's, but the need to change to a four-letter symbol has been a major sticking point. The Nasdaq has long complained that the lack of ticker portability has put it at a competitive disadvantage.
"Companies are realizing that as investors want to trade electronically, why wouldn't companies pay a lower price at a lower cost exchange that is recognized as the global leader for electronic trading," says O'Brien.
However, the current ruling is only for companies with three-letter ticker symbols wishing to switch to the Nasdaq. Companies with one- and two-letter tickers can't transfer their symbols right now. They still need to adopt a four- or five-letter ticker.
Also, the rule only applies to existing companies with a ticker switching from a floor-based exchange to the Nasdaq. Companies currently listing on the Nasdaq are not allowed to change their symbols, nor are any initial public offerings on the Nasdaq allowed to begin trading with a three-letter ticker.
The Nasdaq has filed for approval to transfer companies using one- and two-letter tickers and to allow existing Nasdaq companies to switch to tickers with fewer letters. The SEC is still working on this proposal, which the NYSE opposes.
"We will continue to assign one-, two- and three-lettersymbols to NYSE listed companies," the NYSE said, "both to reinforce our brand distinction and to reassure the investing public of the superior quality and value of aNYSE listing."
For years, the rumor mill said the NYSE wouldn't let any companies grab the highly-coveted single letter ticker symbols of "M" and "I" as a way to entice Microsoft and Intel to switch markets. The NYSE just recently gave up on the dream, some say, and allowed
to grab the "M." But the "I" still awaits a company to claim it. And might the Nasdaq decide to grab the "N" if the SEC gives it approval?
Right now O'Brien says the company likes its ticker -- but maybe, just maybe.