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Wednesday, February 10, 2010

Equity Trader Alert #2010 - 9
NASDAQ OMX Announces Changes to FINRA/NASDAQ TRF Fee Schedule and Market Data Revenue Share Plan

Markets Impacted:

  • The NASDAQ Stock Market
  • Post Trade

Contact Information:

What you need to know:

  • Revised: Effective Thursday, April 1, 2010, the FINARA/NASDAQ TRF will introduce new pricing for Non-Comparison/Accept (Non-Match/Compare) trade reports across all three tapes, pending filing with the SEC on an immediately effective basis.
    • Current fee structure for “Locked-In” trades will be replaced with a new structure.
    • Reporting Parties may be eligible for caps under the new fee schedule.
  • Effective Thursday, April 1, 2010, the FINRA/NADSAQ TRF will change the market share eligibility tiers under the Revenue Share Plan for Tapes A and B, pending filing with the SEC on an immediate effective basis.

What is changing?

Revised: Effective Thursday, April 1, 2010, the FINRA/NASDAQ Trade Reporting FacilityTM (FINRA/NASDAQ TRFTM) will introduce new pricing for Non-Comparison/Accept* (Non-Match/Compare) trade reports for each of the three tapes, pending filings with the Securities and Exchange Commission (SEC) on an immediately effective basis.

Specifically, under the new FINRA/NASDAQ TRF fee schedule:

  • Fees for what were previously labeled “Locked-In Trade Reports” for NASDAQ- and other exchange-listed securities will be replaced by “Non-Comparison/Accept Trade Reports” fees.
  • Firms may be eligible to achieve capped charges based on the number of tape-eligible reports where they are the Reporting Party on a daily average basis over the billing period.
    • This is similar to the current cap that exists for “Locked-In” charges for other exchange-listed securities.

* Please refer to the bottom of this document for terminology definitions.

The new caps and fees are now consistent across all three tapes, as shown in the table below. However, please note this pricing may be modified in the future (subject to appropriate filings with the SEC) to differentiate among tapes.

Tape Daily Average Number of Media/Reporter Trades During the Month Needed to Qualify for Cap
A 2,500
B 2,500
C 2,500
Media/Reporter
Monthly Charge Maximum Monthly Charge if Capped
($0.018) x (Number of Media/Reporter Reports During the Month) ($0.018) x (2,500) x (Number of Trading Days During the Month)
Non-Media/Reporter
Monthly Charge Maximum Monthly Charge if Capped
($0.018) x (Number of Non-Media/Reporter Reports During the Month) ($0.018) x (2,500) x (Number of Trading Days During the Month)
Media/Contra
Monthly Charge Maximum Monthly Charge if Capped
($0.013) x (Number of Media/Contra Reports During the Month) ($0.013) x (2,500) x (Number of Trading Days During the Month)
Non-Media/Contra
Monthly Charge Maximum Monthly Charge if Capped
($0.013) x (Number of Non-Media/Contra Reports During the Month) ($0.013) x (2,500) x (Number of Trading Days During the Month)

Please refer to the following tables for examples of how the new fees will be applied:


No Cap - Tape A
Trade Type/Side Average Daily Trades Billable Rate Cost
Media/Reporter 2,100 2,100 $0.018 $832
Non-Media/Reporter 2,100 2,100 $0.018 $832
Media/Contra 2,100 2,100 $0.013 $601
Non-Media/Contra 2,100 2,100 $0.013 $601
Total 8,400 8,400 $2,864
Capped - Tape A
Trade Type/Side Average Daily Trades Billable Rate Cost
Media/Reporter 4,000 2,500 $0.018 $990
Non-Media/Reporter 4,000 2,500 $0.018 $990
Media/Contra 4,000 2,500 $0.013 $715
Non-Media/Contra 4,000 2,500 $0.013 $715
Total 16,000 10,000 $3,410

Please note that charges for Cancellation, T+1/T+N, Comparison/Accept and Explicit Fee are not changing. The current standard fee schedule is as follows applicable across all tapes:


Standard Fees (Unchanged)
Cancelation Fee $0.25
Comparison/Accept per 100 share block (400 share minimum to 7,500 maximum block)(per side) $0.0144
T+1/T+N entry (per entry) $0.288
Explicit Fee (per side) $0.030

What are the definitions of the terminology used in this alert and in the fee schedule?

Definitions:

  • Comparison/Accept: Transactions that are subject to the ACT Comparison process.
  • Non-Comparison/Accept (Non-Match/Compare): Transactions that are not subject to the ACT Comparison process and may be submitted as "media" and "non-media" trades, clearing and non-clearing trades, AGU, QSR, one-sided, and "internalized" trades.
  • Internalized Trade Reports: Cross trades where a single party is on both sides of a trade report.
  • Executing Party or Reporter (EP): The final party on the reporting or responsible side of a trade report. This position has been formerly known as "Market Maker" or "MM" side.
  • Contra Party or Contra (CP): The party with the trade reporting obligation under FINRA rules. This position has been formerly known as "Order Entry" or "OE" side.
  • Media Reports: Trades where transactions are determined to be media- (tape) eligible by the System.
  • Non-Media Reports: Trades where eligible transactions are marked as non-Tape report eligible upon submission.

How are FINRA/NASDAQ TRF Revenue Share Plan tier eligibilities changing?

Pending filing with the SEC on an immediately effective basis, effective Thursday, April 1, 2010, the FINRA/NASDAQ TRF will change the market share eligibility tiers under the its Revenue Share Plan for Tapes A and B. The FINRA/NASDAQ TRF will be increasing the market share percentages for revenue sharing eligibility for Tapes A and B to be consistent with levels for Tape C. The new tier thresholds and revenue share percentages are now consistent across all three tapes, as shown in the table below:

Previous Tier Threshold New Tier Threshold Revenue Share
Tape A Tier 1 =>0.25% =>0.75% 100%
Tape A Tier 2 <0.25%, =>0.15% <0.75%, =>0.25% 80%
Tape A Tier 3 <0.15%, =>0.10% <0.25%, =>0.10% 50%
Tape A Tier 4 <0.10% <0.10% 0%
Tape B Tier 1 =>0.50% =>0.75% 100%
Tape B Tier 2 <0.50%, =>0.25% <0.75%, =>0.25% 80%
Tape B Tier 3 <0.25%, =>0.10% <0.25%, =>0.10% 50%
Tape B Tier 4 <0.10% <0.10% 0%
Tape C Tier 1 =>0.75% =>0.75% 100%
Tape C Tier 2 <0.75%, =>0.25% <0.75%, =>0.25% 80%
Tape C Tier 3 <0.25%, =>0.10% <0.25%, =>0.10% 50%
Tape C Tier 4 <0.10% <0.10% 0%

Where can I find additional information?

FINRA and TRF (Trade Reporting Facility) are trademarks of Financial Industry Regulatory Authority, Inc.; FINRA/NASDAQ TRF™ is used under license from Financial Industry Regulatory Authority, Inc.

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