Nasdaq OMX Group, Inc. (NASDAQ:NDAQ) has announced plans to launch a platform that will allow investors to trade exchange traded products, or ETPs. The company is in the middle of a diversification of its revenue streams right now, after the company’s first quarter suffered from its disastrous handling of the Facebook IPO, and the legal charges relating to it.


The ETP trading platform will be based on the company’s PSX exchange. Nasdaq OMX Group, Inc. (NASDAQ:NDAQ) came to own that platform in 2010 after it purchased the Philadelphia Stock Exchange. The platform will be relaunched with a focus on Exchange Traded Products in May.

ETP is a term that covers both Exchange Traded Notes, ETNs, and Exchange Traded Funds, ETFs. ETFs are the most popular form of Exchange Traded Products. They are open funds that can be bought and sold like equities, and usually track an underlying index. The ETF usually holds a mix of securities that reflects the value of the underlying index.

ETFs have become increasingly popular in recent years as they allow investors to trade in and out of different indexes efficiently, and at a much lower cost than otherwise. Exchange Traded Notes are different and carry additional risks. ETNs are debt products issued by a bank. They share some of the characteristics of ETFs, in that they can be traded much like equities, but tend to be linked to an index, and do not usually own the security that they are tracking.

ETFs have been marketed aggressively in recent years, and the decision by Nasdaq OMX Group, Inc. (NASDAQ:NDAQ) to get involved in the products is not a surprising one. The company has been missing out on revenue opportunities from a lack of a position in the market. The relaunch of the PSX will change that, and hopefully bring some value to the company’s investors.

There have been some problems with ETFs and other ETPs in recent years, but the market seems destined to continue to grow. The move by Nasdaq OMX Group, Inc. (NASDAQ:NDAQ) reflects the company’s ongoing attempts to diversify its revenue streams. That strategy has so far included the acquisition of eSpeed, an electronic Treasury trading platform, that was not taken well by investors.

So far in 2013, shares in Nasdaq OMX Group, Inc. (NASDAQ:NDAQ) have rise by 16 percent, though they have suffered since the announcement of that acquisition, and the release of Q1 earnings.