“The Nasdaq Stock Market plans to enter the exchange-traded fund business at full speed, with a new venture that will go well beyond its current role of licensing indexes to providers,” according to a report from Dow Jones Newswires.

“The stock exchange hopes to list later this year its first group of ETFs — investment products that track the movements of various indexes, but which differ from index mutual funds because they trade on stock exchanges like stocks. Nasdaq would also introduce a new family of funds to track its various indexes.”

“The plan comes as the Nasdaq gains independence from the National Association of Securities Dealers and its American Stock Exchange affiliate and could pit Nasdaq squarely against the AMEX, which up to now has had a virtual monopoly on ETF listing. ‘Now that we are separate organizations, we can go ahead and list our own ETFs,’ said John Jacobs, Nasdaq’s senior vice president of worldwide marketing and financial products. ‘We are the world’s largest stock exchange and listing of ETFs is a natural extension.’ “

“Mr. Jacobs is the creator of the Nasdaq-100 Index Fund, or QQQ, the most actively-traded ETF — and one of the largest with $22 billion in assets. The fund is listed on the AMEX, though the majority of its trading now takes place outside of that exchange. ‘The Nasdaq is the last family [of indexes] that doesn’t have ETFs,’ Mr. Jacobs said, noting that there are already a number of ETFs for other index families such as Russell, Dow Jones and Standard & Poor’s.”

“A proposal already has been privately submitted with the Securities and Exchange Commission for a group of new equity ETFs that Nasdaq hopes to list before the end of the third quarter, Mr. Jacobs told Dow Jones Newswires. These funds are separate from the planned family of Nasdaq index funds and will be run by an asset manager whose name Mr. Jacobs wouldn’t disclose.”

“The next step to follow, possibly before year’s end, is the launch of the family of Nasdaq index funds, which will include the first-ever fund to mimic the closely-watched Nasdaq Composite Index. Other possible funds in the family will be sector funds based on Nasdaq-listed companies in industries such as finance, technology and telecommunications.”