The Nasdaq Stock Market has given the Securities and Exchange Commission notice that it plans to test a retail price improvement program, for one year.
The pilot plan was disclosed in a filing made Monday with the federal regulator. The commission will now seek public comment on the plan.
Nasdaq’s plan to try and provide retail investors with a fraction of a penny gain over normal trading practices comes after the New York Stock Exchange, BATS and Direct Edge also rolled out similar plans.
The New York Stock Exchange initiated a Retail Liquidity Program on August 1 that incorporates non-displayed orders, matching retail orders seeking price improvement with institutional orders in a cross between a lit and dark pool of orders. BATS Global Markets followed this week with a similar Retail Price Improvement plan that debuts December 17.
The New York Stock Exchange initiated a Retail Liquidity Program on August 1 that incorporates non-displayed orders, matching retail orders seeking price improvement with institutional orders in a cross between a lit and dark pool of orders. BATS Global Markets followed this week with a similar Retail Price Improvement plan that debuts December 17.
The New York Stock Exchange initiated a Retail Liquidity Program on August 1 that incorporates non-displayed orders, matching retail orders seeking price improvement with institutional orders in a cross between a lit and dark pool of orders. BATS Global Markets followed last week with a similar Retail Price Improvement plan that debuts December 17. Direct Edge disclosed its plan, which keeps the trading on its exchanges by marking qualifying orders as Retail Orders, last week as well.
Nasdaq is proposing a one-year pilot program that would, like other plans, create a new class of market participant to steer additional retail order flow to its tent.
Those participants would be called Retail Member Organizations and be permitted to “provide potential price improvement for Retail Orders in the form of non-displayed interest that is priced more aggressively than the Protected National Best Bid or Offer.’’
The “RPI interest” is defined as “non-displayed liquidity on the Exchange that is priced more aggressively than the Protected NBBO by at least $0.001 and that is identified as an RPI Order.’’
Nasdaq, in its filing with the SEC, said it “believes that the minimum price improvement available under the Program, which would amount to $0.50 on a 500-share order, would be meaningful to the small retail investor.’’
