The intensity of competing for a four-letter code is comparable to registering a domain name. This is the current situation in the ETF market in the USA.

With the fierce competition in the ETF market, especially for ETFs tracking individual stocks, the demand for attractive stock codes has sharply increased. Because their codes must include the codes of the tracked stocks, the number of optional code combinations is very limited.

In order to stand out among the myriad of products, issuing institutions are racking their brains, even resorting to hoarding, just to grab a more appealing stock code.

Some industry insiders suggest expanding the code character limit to provide more options. However, this does not seem to be part of Nasdaq's plans.

The stock codes used in the USA ETF market are depleting at an accelerating pace.

Stock codes for ETFs have become a battleground. A good code can not only increase the fund's visibility but also reduce trading costs and improve liquidity. As a result, the competition among issuing institutions for unique codes is becoming increasingly fierce.

Gavin Filmore, Chief Revenue Officer of the white label company Tidal Financial Group, stated in an interview with Bloomberg that the stock codes used in the USA ETF market are depleting at an accelerating pace.

"Competition has never been so fierce. Similar to 'domain name squatting', we can see market participants constantly rushing to grab stock codes, especially when certain industries or themes become more crowded."

According to the rules of the US exchanges, each ETF can only have four characters in its code. Although theoretically there are a very large number of potential combinations, about 456,976, in reality, due to various restrictions, the number of available codes is not that high.

For example, ETFs related to MicroStrategy (MSTR), due to 'MS' already being used by MSTR, only have 52 available codes left. These 52 options involve placing one of the 26 English letters in front of or behind 'MST-'.

Tuttle Capital CEO Matthew Tuttle is well known for issuing ETFs that take opposing views to Cathie Wood (founder of Ark Invest). He mentioned that personally, he would 'hoard' some stock codes that he believes have potential. This is similar to domain name squatting, securing good codes in advance for future ETF releases.

"If a fund engages in both long and short strategies, it's best if the fund's stock code reflects this hedging strategy. For example, 'U' (Up) represents an uptrend and is seen as a symbol of a bull market."

Industry experts suggest expanding the code character limit, but Nasdaq remains 'non-committal' on this.

For the past 15 years, four-letter codes have been standard for ETFs, but with the significant increase in the number of ETFs, this shortage issue is becoming more prominent. CEO of Granite Shares, Will Rhind, mentioned that due to stricter requirements from exchanges for reserving and delisting stock codes, ensuring unique stock codes for individual ETFs is becoming increasingly difficult.

Some industry insiders suggest expanding the code character limit to provide more options. However, this does not seem to be part of Nasdaq's plans.

Nasdaq's Chief Revenue Officer and Global Head of Listings, Jeff Thomas, believes that there is currently no shortage of stock codes.

"Occasionally, we receive inquiries from some companies, such as, how can I be more creative with these stock codes? Can I add numbers besides letters?"

Regarding the idea of adding numbers to stock codes, Rhind summarized:

"Personally, I think this is a very good addition. All of our products in Europe follow this naming structure, so I think it is indeed helpful and will provide some extra breathing space for those who have trouble finding stock codes."