After months of slamming the New York Stock Exchange's rules as restrictive and bad for investors, the Nasdaq is now trying to stop its own bellwether companies from trading on the Big Board.
The electronic stock market, which recently moved to dual list six NYSE-listed companies, recently said stocks in the Nasdaq 100 must not list on any other exchange if they want to remain part of the index.
The move is particularly ironic since Nasdaq argued for years against the NYSE's Rule 500, dubbed "the roach motel," which made it difficult for NYSE-listed companies to leave the exchange.
"It's the most hypocritical thing anybody could do - stomping around screaming about Rule 500 and coming up with your own," said Archipelago exchange CEO Jerry Putnam. "At the minimum, you look like a hypocrite. It's indefensible."
The move could be a harsh punishment for companies that choose to list on more than one exchange - something Nasdaq CEO Robert Greifeld has recently been encouraging NYSE-traded companies to do.
Dual listing, Greifeld said in numerous interviews, was good for investors and good for companies.
The listing debate has heated up as the NYSE - the premiere exchange for listings - has come under pressure from scandals ranging from an investigation into its trading specialists to the fat pay package of ousted chief Dick Grasso.
Now it seems Nasdaq-listed companies that choose to dual list will be punished by being kicked out of the prestigious Nasdaq 100 index.
That index represents the Nasdaq's top 100 non- financial companies and is the backbone of more than 400 financial products in 39 countries.
"Being included in a Nasdaq index is a benefit we reserve for listed companies, but this does not impede trading on other markets," said Nasdaq spokeswoman Bethany Sherman.
In its petition to have Rule 500 revoked, the Nasdaq said Rule 500 "impedes issuers in selecting the marketplace best suited to their needs" and is "antithetical to the free and open competition that the commission has consistently advanced and that is the bedrock of the U.S. capital markets system."
To be sure, Archipelago is aggressively courting companies to dual list on their own exchange and is at odds with the Nasdaq over a lawsuit filed in October alleging they were engaged in unauthorized trading of the QQQ's.
Stocks that are part of the Nasdaq 100 enjoy the prestige of the index, as well as the exposure of being part of popular products like the QQQ's - an exchange-traded fund made up of the Nasdaq 100.
Kicking a company out would put pressure on that stock, say traders. "It would cause selling," said one trader on the Big Board who is familiar with the listing debate. "The upside is they would no longer have to list on a fragmented market," he chided.
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