Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 135

Dealing with time zones when pricing global ETFs

Many investors wonder how Exchange Traded Products (ETPs), including Exchange Traded Funds (ETFs), that track international markets are priced on the ASX when the underlying offshore markets are closed. Australians often find out how the US market has performed overnight by listening to the news whilst heading to work or reading the paper with their morning coffee. This can lead to some confusion, as although a news report might say the S&P 500 or the NASDAQ has moved by a certain percentage overnight, this price change is often not exactly reflected in the opening price of funds (which aim to track these indices) when the ASX starts trading from 10.00am.

A typical question we receive is “The S&P 500/NASDAQ etc. did +% or -% last night – why isn’t my fund doing the same?”

Futures markets continue to trade when stock exchanges are closed

There is a ready answer. These differences are explained by the differing time zones in which the international exchanges around the globe operate, and the fact that futures markets operate continuously around the clock even when certain exchanges are closed.

We’ll use the BetaShares NASDAQ 100 ETF (ASX Ticker: NDQ) as an example (and ignore the effect of currency fluctuations).

ML-Betashares Time-Zone-clocks

ML-Betashares Time-Zone-clocks

When tracking its benchmark index (the NASDAQ 100 Index), NDQ has performed well since inception. The chart below shows NDQ vs. the NASDAQ 100 Index. Although you can’t see it, there are actually two lines being plotted here (the two lines are virtually indistinguishable from each other).

Period 26 May 2015 to 30 September 2015. Source: BetaShares. Past performance is not an indicator of future performance. Period 26 May 2015 to 30 September 2015.
Source: BetaShares. Past performance is not an indicator of future performance.

Time zones and fund pricing

The charts below show the respective returns of the NASDAQ 100 Index and the Nasdaq 100 Futures Market on 1 September 2015 (NYC Time) and examine how these reconcile with the pricing of the BetaShares NASDAQ 100 ETF when it opened on the ASX on 2 September 2015.

At the close of the US ‘cash’ equities markets at 4pm (New York time) 1 September 2015, the value of NASDAQ 100 Index – based on shares trading on this market – was down 3.08% on its closing value of the previous day. This is the figure typically quoted in news reports in Australia over morning coffee. These reports will say, for example, “the Nasdaq closed down 3.08% today.”

ML-Betashares 061015_1-1024x445Yet it should be noted that the ASX market won’t open until 10am Sydney time, or around 4 hours (depending on daylight savings) after US equity markets have closed. Will the 3% decline in the market still be relevant? After all, market sensitive news is still being released. Indeed, it is often the case that companies release important new information after the US cash equities markets (like the New York Stock Exchange) have closed for the day.

New information is in the price when ASX opens

This new information is reflected in the NASDAQ 100 Futures Market, which continues to trade even after the US equity market has closed. The chart below shows the price of the NASDAQ 100 Futures. As might be evident, the futures price tracks the actual Nasdaq 100 cash index quite closely when US equity markets are open.

The gap between the second red line and the green line, however, shows the performance of the NASDAQ 100 Futures prices between the time of the US equity market’s close and the ASX open. As seen, on this day, the NASDAQ 100 Futures price rallied by 1.16% in this period, perhaps reflecting the release of some positive market news.

ML-Betashares 061015_2-1024x396Here’s the important point: the market makers involved in the Australian-listed NDQ ETF will set opening prices for the Fund with reference to the NASDAQ-100 Futures market as at ASX’s market open. It is the best indicator of fair value while the US equity market is closed.

The opening bid-offer prices of NDQ ETF will reflect the higher NASDAQ-100 Futures price at the time the ASX opens. What’s more, the closing bid-offer prices of NDQ ETF will reflect the price of Nasdaq-100 Futures at around the ASX close at 4pm Sydney time.

It follows that the overnight percentage changes will reflect the percentage changes in the NASDAQ-100 Futures price at the time of the ASX close the day before and at ASX open the following morning. Due to the timing gaps with the opening and closing times of the NYC, these movements will often not mirror those of the actual NASDAQ physical index.

To be precise, the actual opening and closing recorded prices of NDQ ETF will depend on the time at which the first and last trades take place on that day, which should be close to 10am and 4pm respectively though not necessarily exactly at those times. That means that if, for example, the last trade of NDQ ETF takes place at 3.45pm then the closing prices will be reflective of the Nasdaq-100 Futures price at 3.45pm.


Matthew Leung is a Business Development Associate at BetaShares Capital, a leading provider of Exchange-Traded Products. 


Leave a Comment:



Will ETF liquidity be there when I need it?

$100 billion! Five reasons investors are flocking to ETFs

Thematic exposure to global trends using ASX


Most viewed in recent weeks

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Latest Updates


Stop treating the family home as a retirement sacred cow

The way home ownership relates to retirement income is rated a 'D', as in Distortion, Decumulation and Denial. For many, their home is their largest asset but it's least likely to be used for retirement income.


Hey boomer, first home buyers and all the fuss

What is APRA worried about? Most mortgagees can easily absorb increases in interest rates without posing a systemic threat to the banking system. Housing lending is a relatively risk-free activity for banks.


Residential Property Survey Q3 2021

Housing market sentiment has eased from record highs and confidence has ticked down as house price rises slow. Construction costs overtook lack of development sites as the biggest impediment for new housing.

Investment strategies

Personal finance is 80% personal and 20% finance

Understanding your own biases and behaviours is even more important than learning about markets. Overcome four major cognitive biases that may be sabotaging your investing and recognise them in others.

Where do stockmarket returns come from over time?

Cash flow statements differ from income statements and balance sheets, and every company must balance payments to investors versus investing into the business. Cash flows drive the value of the business.

Fixed interest

How to invest in the ‘reopening of Australia’ in bonds

As Sydney and Melbourne emerge from lockdown, there are some reopening trades in the Australian credit market which 'sophisticated' investors should consider as part of their fixed income portfolios.


10 trends reshaping the future of emerging markets

Demand for air travel, China’s growing middle-class population, Brazil’s digital payments take-up, Indian IPOs, and increased urbanisation are just some of the trends being seen in emerging economies.



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.