One must be wondering if eToro really do act as a broker between traders and Nasdaq market. When it was written there “you are purchasing underlying asset” for non-leveraged long position, are you sure that you really own the shares in that company?
I made some online search and find some valuable information about the involvement of eToro and Nasdaq.
Back in June 2018, there was an article by Finextra titled “eToro lets clients invest directly in shares“. This article indicate the beginning of eToro offering purchase of underlying asset aside from the normal Contract For Differences (CFD). Yoni Assia the CEO of eToro was speaking about enabling eToro clients to invest in the asset they wish to own such as shares.
Prior to that time only CFD is supported by eToro which means clients enter into agreement with eToro as CFD provider for the exchange of differences between opening price and closing price of a certain asset. In CFD either CFD provider will pay the client or the client will pay the provider. In other words it is the game between clients and the provider.
But since the introduction of share trading which means clients are buying the underlying asset, it’s not the game between the two anymore but a trading between purchaser and the market. Read here to understand better the differences between CFD and stock trading.
Just more recently there is another article published by Nasdaq website about “eToro Chooses Nasdaq to Expand U.S. Market Insight for Global Investors“. It was published on 20th Oct 2020. Captured in this article is eToro Tal Ben-Simon, Vice President of Product and Oliver Albers, Senior Vice President and Head of Data for Nasdaq Global Information Services. They both commenting on this collaboration and the service subscribed by eToro from Nasdaq is called Nasdaq Basic. Echoing the same news was Traders Magazine which can be found here.
Nasdaq Basic is a solution for a real-time U.S equity quotes and trade. According to NasdaqTrader.com this package include Broker Dealer Enterprise Licence fee amounting to $100,000 per month on top of $0.50 per user per month usage fee.
We can safely conclude that it is a real trading and eToro is not fooling around when they said you are purchasing the underlying asset on the non-leveraged long position.