Monday, April 29, 2013
Equity Trader Alert #2013 - 36
PSX Announces May 1, 2013 Pricing and SEC Approval of the New ETP Market Model
Markets Impacted:Contact Information:
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What you need to know:
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How is the PSX market model changing?
Effective May 1, 2013, NASDAQ OMX PSXSM (PSXSM) will introduce a new price-time priority market model with a focus on ETPs. The new priority model, also employed on The NASDAQ Stock Market® (NASDAQ®), NASDAQ OMX BXSM (BXSM) and other U.S. equity exchanges, allocates marketable orders on a price, display type, and time basis. At a given price level, displayed orders will always execute before non-displayed orders, and among a given display type, orders will be executed in the order received.
What are the new rates to add or remove liquidity?
Pending filing with the Securities and Exchange Commission (SEC), PSX will introduce new pricing summarized in the tables below. For complete information on PSX pricing, please see the PSX pricing page.
Fees to remove liquidity
Tape A | Tape B | Tape C | |
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Firm adds at least 10,000 shares/day on average | $0.0028 | $0.0025 | $0.0028 |
Routable orders | $0.0028 | $0.0025 | $0.0028 |
All other orders | $0.0030 | $0.0030 | $0.0030 |
Rebates to add liquidity
All Securities | |
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Displayed Orders in XLP qualified securities | $0.0028 |
Displayed Orders if Firm adds at least 100,000 shares/day | $0.0026 |
Other displayed orders | $0.0020 |
Midpoint orders | $0.0010 |
Non-displayed orders | $0.0005 |
How does a firm qualify as an XLP?
A participant attains XLP status on a per security basis by meeting certain quoting and liquidity provision requirements each month. By meeting affirmative standards, XLPs receive an enhanced rebate to add displayed liquidity on PSX.
MPIDs must meet the following obligations to qualify as an XLP in a security:
- Maintain a one- or two-sided quote, of at least one round lot, at the NBBO in the security for an average of at least 25% of market hours each month.
- Belong to a firm that provides on average at least 2,000,000 shares per day across all securities.
If an MPID qualifies as an XLP in over 500 securities, it will receive the XLP rebate to add displayed liquidity in all securities.
How does my firm register as a market maker on PSX?
PSX participants should contact NASDAQ OMX Subscriber Services to become a registered market maker. The market maker obligations on PSX, including a continuous two-sided quote, are identical to those currently in place on the NASDAQ Stock Market.
Does my firm have to be a registered market maker to earn the XLP designation?
No, the XLP designation is available to any PSX MPID meeting the quoting and liquidity provision requirements described above.
Will there be additional market making opportunities?
Yes, pending filing with the SEC, PSX will introduce a competitive Lead Market Making program in ETP securities. Registered Market Makers in ETPs will be able to assume enhanced quoting obligations in exchange for enhanced benefits in their assigned securities. PSX will provide further information regarding the Lead Market Making program in the coming weeks. In the interim, firms interested in learning more about the program should contact their U.S. Transaction Services sales representative.
What do I need to do before May 1, 2013?
PSX participants should ensure that their order entry ports have been migrated to the new IP address range required to connect to the new PSX. If you have any questions about your IP migration status, please contact NASDAQ OMX Trading Services or your sales representative.
Where can I find additional information?
- Refer to the Trading on PSX page on the NASDAQ OMX Trader® website.
- Refer to the PSX pricing page on the NASDAQ OMX Trader website.
- Contact Transaction Services U.S. Market Sales at +1 800 846 0477.
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