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Friday, April 13, 2012

Equity Technical Update #2012 - 11
Primary Peg Orders with an Offset to be Non-Displayed on NASDAQ, BX and PSX

Markets Impacted:

Contact Information:

What you need to know:

  • UPDATE: This change has been postponed to give firms more time to prepare. A new production date will be announced in the near future.
  • The NASDAQ Stock Market® (NASDAQ®), NASDAQ OMX BXSM (BXSM) and NASDAQ OMX PSXSM (PSXSM) will change the treatment of Primary Peg Orders with an Offset to be non-displayed.

What are Primary Peg Orders?

Pegged Orders are orders that, once entered, adjust in price automatically, in response to changes in the inside bids or offers of the NASDAQ Market Center or the national market system. A Primary Pegged Order specifies that its price will equal the inside quote on the same side of the market.

Additionally, Pegged Orders may establish their pricing relative to the appropriate bids or offers by selecting one or more offset amounts.

How are Primary Peg Orders with an offset amount changing?

UPDATE:NASDAQ, BX and PSX will change the treatment of Primary Peg Orders with an Offset to be non-displayed. This change is being postponed to allow firms more time to prepare. A new production date will be announced in the near future.

Why is this changing?

The display of Primary Pegs with an offset can potentially result in excessive messaging when multiple venues display pegged non-marketable orders. In these scenarios, it is possible for the Primary Peg orders on each venue to react to and change in relation to each other, resulting in excessive messaging and "quote flickering".

By changing the treatment of Primary Peg Orders with an Offset to be non-displayed, NASDAQ, BX and PSX will prevent this feedback loop, adding to system stability and improving market quality.

Where can I find additional information?


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