Tuesday, June 9, 2015

Equity Trader Alert #2015 - 85
Nasdaq to Introduce a New Patent Pending Retail Order Process


  • New Functionality

Markets Impacted:

Contact Information:


Nasdaq will introduce a patent pending Retail Order process. The Retail Order Process (“Process”) is designed to improve market quality for Retail Investor Orders. Pending SEC approval, Nasdaq is intending to offer the Retail Order Process in August 2015. More information on the exact date is forthcoming.

Retail Investor Orders (currently known as Designated Retail Orders pursuant to Rule 7018) designated as non-marketable to be posted on the Nasdaq book will be entered into the Process for evaluation.  If the patent pending Process determines that a Retail Investor Order designated as non-marketable is instead marketable upon receipt, the Process will route eligible Retail Investor Orders to Registered Nasdaq Market Makers for potential price improvement opportunities. Additionally, the Process may route Retail Investor Orders to certain exchanges.  Retail Investor Orders not executed in the patent pending Process will be submitted to the Nasdaq book for potential execution and display.

Pending filing with the SEC and operational effectiveness, the Exchange intends to rename Designated Retail Orders as Retail Investor Orders. Retail Investor Orders will be defined as an agency order or a riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a member, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. The term “natural persons” refers to the origination of the order from a request made by a human as opposed to the generation of an order by a computer algorithm. An order from a “natural person” can include orders on behalf of accounts that are held in a corporate legal form, such as an Individual Retirement Account, Corporation, or a Limited Liability Corporation that has been established for the benefit of an individual or group of related family members, provided that the order is submitted by an individual.

Registered Nasdaq Market Maker eligibility for the above program will be based on several factors including but not limited to: market making experience, adequacy of capital, willingness to promote Nasdaq as a marketplace, operational capacity, and historical adherence to Nasdaq rules.   

Retail Firms and Market Makers interested in participating in the new patent pending Retail Investor Order market quality process should contact U.S. Market Sales at +1 800 846 0477.



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Nasdaq (Nasdaq: NDAQ) is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its diverse portfolio of solutions, Nasdaq enables customers 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 90 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to approximately 3,900 total listings with a market value of approximately $13 trillion. To learn more, visit: business.nasdaq.com.