Wednesday, April 22, 2009

Equity Trader Alert #2009 - 28
NASDAQ Introduces TFTY, A New Cost Saving Routing Strategy, Effective May 1, 2009

What is the new strategy?

Effective Friday, May 1, 2009, NASDAQ^® will offer a new routing strategy that will access NASDAQ OMX BX^SM (BX^SM), low-priced liquidity and the New York Stock Exchange (NYSE). This new strategy, referred to as Thrifty (TFTY), will provide additional cost saving opportunities for customers.

All orders using the TFTY strategy must have a limit price and must be entered between 9:30 a.m. and 4:00 p.m., Eastern Time (ET). Immediate or Cancel (IOC) orders will not route to NASDAQ. Orders with a Time-in-Force of Day will route to NASDAQ after checking the other destinations and post on NASDAQ.

What is the pricing for sending orders using the TFTY strategy?

• Orders that execute on BX will receive the $0.0006 per share rebate for removing liquidity in Tape A and Tape C securities, and will be charged $0.0014 per share for Tape B securities.
• Orders that execute on market centers with low-priced liquidity will be charged $0.0005 per share for all U.S. equities.
• Orders that execute at the NYSE will be charged $0.0014 per share for Tape A securities.
• Orders with a Time-in-Force of Day have the ability to route to NASDAQ. They will be charged a remove fee of $0.0030 and receive a rebate for adding liquidity based upon a firm's volume tier.

Why is NASDAQ adding this functionality?

NASDAQ recognizes the need for efficient, low-cost trading of U.S. equities. Routing to BX and other low-priced venues can provide customers with faster and less expensive executions than routing directly to the NYSE.

Can I trade all U.S. equities using this new strategy?

Yes. Tape A, Tape B and Tape C securities will route to BX as well as other market centers with low-priced liquidity. Tape A securities will also route to the NYSE. For more information about TFTY functionality, refer to the Order Types and Routing Strategy Reference Guide on the NASDAQ OMX Trader^® website.

How will I know where the order executes?

The following liquidity codes will identify where your trade executes when you use the TFTY strategy:

Where can I get additional information?

• Refer to Equity Technical Update #2009-14 for specifications.
• Refer to the Order Types and Routing Strategy Reference Guide.
• Refer to the Trading on NASDAQ page on the NASDAQ OMX Trader^® website.
• Contact Transaction Services U.S. Market Sales at +1 800 846 0477.

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