Tuesday, December 28, 2010
Equity Trader Alert #2010 - 85
NASDAQ Updates ISP Rules and Routing Fees Effective January 3, 2011
What you need to know:
- Effective Monday, January 3, 2011, The NASDAQ Stock Market® (NASDAQ®) will update the Investor Support Program (ISP) rules, subject to filing with the Securities and Exchange Commission (SEC).
- Along with the updates announced in Equity Trader Alert #2010-83, NASDAQ will also update routing fees, effective Monday, January 3, 2011, subject to filing with the SEC.
How is the ISP changing?
Effective Monday, January 3, 2011, NASDAQ will update the ISP rules to reflect the following changes, subject to filing with the SEC:
- Any firm that did not add liquidity in August 2010 will be deemed to have added an average of 35,000,000 shares per day during that month for purposes of calculating that firm’s August baseline.
- A firm’s August baseline will include the orders that it sent to NASDAQ directly plus the orders that it sent to NASDAQ indirectly via another party with little or no substantive intermediation by such other party (Indirect Order Flow). NASDAQ will determine substantive intermediation by assessing whether such other party sending Indirect Order Flow to NASDAQ had little or no discretion in selecting key order attributes such as symbol, price, size and time-in-force.
- Participating firms must certify their August baseline volume, including the amount of Indirect Order Flow that they sent to NASDAQ.1 Contact NASDAQ OMX Subscriber Services for more information. Once a month, NASDAQ may request certification regarding compliance with other parts of the ISP program.
- The ISP credit will apply only to executions at prices at or above $1.00 per share.
How are routing fees changing?
Effective Monday, January 3, 2011, NASDAQ has updated its pass-through fees to route to NYSE to reflect NYSE’s pricing change, as follows:
- The rebate for liquidity added to NYSE will be $0.0015 per share.
- The fee for MOPP orders and directed Intermarket Sweep Orders (ISO) will be $0.0025 per share.
- The fee for Non-ISO ISNY orders for firms that add less than 35 million shares (based on average daily shares of liquidity per month) will be $0.0025 per share.
- The fee for Non-ISO ISNY orders for firms that add 35 million shares or more (based on average daily shares of liquidity per month) will be $0.0024 per share.
- The fee for all routing strategies that check the NASDAQ book and Directed Orders will be $0.0023 per share.
- The fee to route to NYSE using the SAVE and TFTY routing strategies will be $0.0022. Firms should note that this rate has been updated since the posting of Equity Trader Alert #2010-83 to reflect NYSE’s pricing change.
Along with the updates announced in Equity Trader Alert #2010-83 whereby the new NASDAQ OMX BXSM (BXSM) rebate of $0.0014 per share will be passed through for certain orders, DOTI orders will also pass through the BX rebate.
Where can I get additional information?
- Refer to the NASDAQ pricing page on the NASDAQ OMX Trader® website.
- Refer to the current ISP Fact Sheet and Rule 7014.
- Contact Transaction Services U.S. Market Sales at +1 800 846 0477.
- Contact NASDAQ OMX Subscriber Services at +1 212 231 5180.
1 Firms must identify their ISP ports no later than Friday, January 7, 2011, to participate in the ISP for the month of January. For inclusion in the program going forward beginning in February, firms must identify their ports no later than the first trading day of the month.
Nasdaq (Nasdaq: NDAQ) is a leading provider of trading, clearing, exchange technology, listing, information and public company services across six continents. Through its diverse portfolio of solutions, Nasdaq enables clients to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 85 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to approximately 3,800 listed companies with a market value of $10.1 trillion and nearly 18,000 corporate clients. To learn more, visit: www.nasdaq.com/ambition or business.nasdaq.com.