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Wednesday, February 3, 2016

Equity Trader Alert #2016 - 25
Nasdaq Enhances Exchange Traded Product (ETP) Market Quality Incentive Program (MQP)

Category:

  • Market Making Incentives

Markets Impacted:

Contact Information:

Resources:

  • Rule 5950

Pending SEC approval, with a target effective date of April 1, 2016, Nasdaq will enhance the current Market Quality Incentive Program (MQP) pilot program. This enhancement of the MQP is aimed at promoting increased trade quality in exchange traded products (ETPs) through Nasdaq funded registered market-maker performance incentives.

New Provisions:

In addition to ETP issuers having the ability to fund the MQP, Nasdaq will have the ability to fund the MQP. Nasdaq funding is not dependent on issuer funding. Qualified registered market-makers accepted into the MQP that enhance the market quality of ETPs in the program will be eligible to receive additional performance incentives.

MQP funding will be generated as a revenue share. Revenue share will equal 20% of net trade revenue Nasdaq earns from an issuer’s primary ETP listings on Nasdaq.

The exchange believes increased performance incentives will help foster increased trade quality.

A complete copy of the regulatory filing can be found here.

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