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Wednesday, March 26, 2014

Equity Trader Alert #2014 - 28
Modifications to NASDAQ Pricing Effective April 1, 2014

Category:

  • Pricing

Markets Impacted:

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Beginning Tuesday, April 1, 2014, NASDAQ will increase the performance requirements of Qualified Market Makers (QMMs) to provide better liquidity to the marketplace. QMMs will now be required to add liquidity of at least 0.3% of total consolidated volume during the month.

How to Become a QMM

A Member MPID attains QMM status by meeting certain quoting requirements each month. QMMs must:

  • Maintain a one- or two-sided quote at the NBBO in an average of 1,000 securities for 25% of market hours each month.
  • Be in compliance with NASDAQ's excessive messaging policy. Firms must ensure that their weighted order to trade ratio does not exceed a certain threshold, outlined in detail in the Excessive Messaging Policy.

Opening Cross

Additionally, NASDAQ will make the following changes to fees to execute in the Opening Cross:

  • The fee cap of $20,000 that covers all orders in the Opening Cross will be available to firms that add, at a minimum, one million shares of liquidity to NASDAQ, on average per day, during the month.

Rate to Add Non-Displayed Liquidity

Finally, NASDAQ will adjust certain rates to add non-displayed liquidity for Tape C securities. Firms must add at least one million shares of non-displayed liquidity on average per day during the month to be eligible for a rebate of $0.0005 per share executed. All other firms not eligible for a rebate will execute these shares free of charge.


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