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Wednesday, January 2, 2019

Equity Trader Alert #2019 - 1
FINRA/Nasdaq Trade Reporting Facility (TRF) Retail Participant Pricing Program Update Effective 1/2/2019

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  • Pricing

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The following pricing changes apply to FINRA/Nasdaq TRF Retail Participants and will be operative on Wednesday, January 2, 2019, subject to a rule filing to amend FINRA Rules 7610A and 7620A (see SR-FINRA-2018-042 for additional information).

FINRA/Nasdaq TRF Retail Participant Program

As previously announced in Equity Trader Alert # ETA2018-63, the FINRA/Nasdaq TRF established a Retail Participant Program to reduce costs to Retail Participants and their retail customers. To qualify as a Retail Participant in the FINRA/Nasdaq TRF Carteret, the FINRA/Nasdaq TRF Chicago, or both (the “FINRA/Nasdaq TRFs”), substantially all of a participant’s trade reporting activity to the FINRA/Nasdaq TRF(s) in which it participates must comprise Retail Orders. To become a Retail Participant, a participant must complete and submit a FINRA/Nasdaq TRF Retail Participant Application Form, which is available on the FINRA/Nasdaq TRF Forms and Agreements page, and be approved by Nasdaq.

Pricing Changes

The amendments to FINRA Rule 7620A replace the existing Retail Participant fee cap programs with two discount/cap programs that are intended to decrease fees that many Retail Participants pay to the FINRA/Nasdaq TRFs for trade reporting activity.

Retail Contra Volume Discount Program

Prior to January 2, 2019, the Retail Participant execution rate for Media/Contra Party and Non-Media/ Contra Party executions is $0.013 per execution per Tape. Starting January 2, 2019, FINRA/Nasdaq TRF Retail Participants may qualify for volume-based discounted fees if they meet the daily average combined Contra Party (Media/Non-Media) execution tiers by tape as follows:

Tape A

Average Daily Contra Executions per Month Per Contra Execution Rate Maximum, If Capped
0-49,999 $0.0130 n/a
50,000-100,000 $0.0120 n/a
100,001-200,000 $0.0072 n/a
200,001-300,000 $0.0052 n/a
>300,000 $0.0050 $32,000

Tape B

Average Daily Contra Executions per Month Per Contra Execution Rate Maximum, If Capped
0-14,999 $0.0130 n/a
15,000-30,000 $0.0120 n/a
30,001-60,000 $0.0072 n/a
60,001-100,000 $0.0052 n/a
>100,000 $0.0050 $11,000

Tape C

Average Daily Contra Executions per Month Per Contra Execution Rate Maximum, If Capped
0-49,999 $0.0130 n/a
50,000-100,000 $0.0120 n/a
100,001-200,000 $0.0072 n/a
200,001-300,000 $0.0052 n/a
>300,000 $0.0050 $32,000

Retail Participant Combined Cap

FINRA/Nasdaq TRF Retail Participants may qualify for discounted fee caps for their combined Executing and Contra Party activity if they meet the daily average Media/Executing Party trade reports during the three-month period immediately prior to the assessment date. This cap qualifying activity is assessed based upon the Retail Participant’s aggregate average daily Media/Executing Party trade reporting activity across Tapes A, B, and C.

Tier Daily Average Media/Executing Party Trades Maximum Monthly Charge For Total Executing Party/Contra Party Activity
1 1,000-2,000 $50,000
2 2,001- 4,000 $25,000
3 >4,000 $15,000

Retail Participant Transaction Credits

Under Rule 7610A, FINRA members that report over-the-counter (“OTC”) transactions in NMS stocks to a FINRA/Nasdaq TRF for public dissemination or “media” purposes may receive quarterly transaction credits that equal a percentage of FINRA/Nasdaq TRF revenues that are attributable to the members’ reported transactions. The FINRA Rule 7610A rule change establishes a transaction credit schedule for Retail Participants and makes transaction credits more accessible to Retail Participants. Below is a side-by-side comparison of FINRA/Nasdaq TRF Participant and FINRA/Nasdaq TRF Retail Participant transaction credit tiers for quarterly transaction credit payouts.

Tape A

Percent Market Share 1 TRF Participant Payout Tier TRF Retail Participant Payout Tier
Greater than or equal to 2% 98% 98%
Less than 2% but greater than or equal to 1% 95% 95%
Less than 1% but greater than or equal to 0.5% 75% 75%
Less than 0.5% but greater than or equal to 0.1% 20% 75%
Less than 0.1% 0% 75%

Tape B

Percent Market Share 1 TRF Participant Payout Tier TRF Retail Participant Payout Tier
Greater than or equal to 2% 98% 98%
Less than 2% but greater than or equal to 1% 90% 90%
Less than 1% but greater than or equal to 0.35% 70% 70%
Less than 0.35% but greater than or equal to 0.1% 10% 70%
Less than 0.1% 0% 70%

Tape C

Percent Market Share 1 TRF Participant Payout Tier TRF Retail Participant Payout Tier
Greater than or equal to 2% 98% 98%
Less than 2% but greater than or equal to 1% 95% 95%
Less than 1% but greater than or equal to 0.5% 75% 75%
Less than 0.5% but greater than or equal to 0.1% 20% 75%
Less than 0.1% 0% 75%

More Information

If you have any FINRA/Nasdaq Retail Participant program and pricing questions, please contact Nasdaq TRF Product Management by email, or FINRA Market Operations at +1 866 776-0800.

1: “Market share” means a percentage calculated by dividing the total number of shares represented by trades reported by a FINRA member to the FINRA/Nasdaq TRF for media purposes during a given calendar quarter by the total number of shares represented by all trades reported to the Consolidated Tape Association or the Nasdaq Securities Information Processor, as applicable, during that quarter. Market Share is calculated separately for each tape. The Rule notes, that if a FINRA member reports trades to both FINRA/Nasdaq TRFs during a given calendar quarter, then "market share" shall be calculated by dividing the total number of shares represented by trades reported by the member to both of the FINRA/Nasdaq TRFs during that calendar quarter by the total number of shares represented by all trades reported to the Consolidated Tape Association or the Nasdaq SIP, as applicable, during that quarter.

FINRA, Trade Reporting Facility, and TRF are registered trademarks of Financial Industry Regulatory Authority, Inc. and are used under license from Financial Industry Regulatory Authority, Inc. Nasdaq, FINRA/Nasdaq Trade Reporting Facility and FINRA/Nasdaq TRF are trademarks of Nasdaq, Inc.


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