Nasdaq OMX Group’s (NasdaqGS: NDAQ) proposed “iNAV Pegged Order” would allow exchange traded fund investors to place a type of limit order on trades based on a fund’s net asset value.
The new order type would put in orders “pegged” to U.S. equity ETFs’ most recent iNAV, writes Rosalyn Retkwa for Institutional Investor. [Digging Deeper Into Nasdaq’s ETF Trading Proposal]
“As the iNAV changes, so move the iNAV Pegged Orders,” according Nasdaq’s SEC filing. “A Pegged Order may have a limit price beyond which the order shall not be executed.”
“The iNAV Pegged Order type would allow certainty of execution with a greater correlation to the ETF’s fair value for those seeking to invest on a more informed basis,” Nasdaq added.
“I think it’s a good idea,” Michael Rawson, an ETF analyst at Morningstar in Chicago, said in the article. “It’s like a limit order, but pegged to the current iNAV of a fund, and that makes sense.”