Tuesday, December 28, 2010

Equity Trader Alert #2010 - 85
NASDAQ Updates ISP Rules and Routing Fees Effective January 3, 2011

Markets Impacted:

Contact Information:

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?


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.

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About the NASDAQ OMX Group:
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with more than 3,600 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit www.nasdaqomx.com.