Nasdaq created the Midpoint Extended Life Order (M-ELO) in 2018 to help institutional investors with longer-term investment horizons interact with each other at the midpoint of the National Best Bid and Offer (NBBO). There is a built-in holding period before a M-ELO order can be executed, to protect M-ELO orders from negative price impact.
In the below e-mail to customers, published with Nasdaq’s permission, the exchange announced a reduction in the holding period from 500 milliseconds, or half a second, to 10 milliseconds.
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| Effective Monday, May 11, Nasdaq is optimizing the M-ELO timer by reducing the holding period from 500ms to 10ms. This enhancement will broaden the spectrum of order type use-cases and opportunities while sustaining its strong performance characteristics. M-ELO remains the highest performing order type among its peers, providing a purpose-built midpoint solution to minimize market impact on the single largest exchange in the U.S. |
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| Benefits of M-ELO and M-ELO + Continuous Book Orders: |
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Interact with like-minded investors |
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Increased availability for algo and routing strategies |
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Highest quality of execution at the midpoint of the NBBO |
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| During March’s unprecedented volatility, M-ELO’s quote stability remained consistent and the M-ELO order type outperformed all other venues, including those offering a delay mechanism. |
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| Absolute market response shows the low impact and trade footprint of a M-ELO execution. |
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| To better understand the benefits of M-ELO, as well as the market response to the recent periods of volatility, tune into #TradeTalks with Nasdaq Global Markets Report Jill Malandrino. |
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| #TradeTalks: Nasdaq M-ELO Order Type Enhancements with Reduced Holding Period |
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Andrew Oppenheimer
AVP, U.S. Equities |
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| #TradeTalks: Spreads, Liquidity, Routing and Nasdaq’s Midpoint Segment Called M-ELO |
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Chuck Mack
Head of U.S. Equities |
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| If you have any questions about the above information, don’t hesitate to reach out to us at sales@nasdaq.com. We look forward to helping you incorporate M-ELO into your trading strategies! |
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