Nasdaqs new pricing package
Our Markets Bureau
07 February 2002
The first filing, filed for immediate effectiveness and to be implemented on 11 February 2002, consists of an increase in tape revenue sharing with all market participants. Tape revenue sharing for all trades reported to Nasdaq's automated confirmation transaction service (ACT) will be increased to 80 per cent after accounting for the costs of Nasdaq's regulation. The result should make it more economical for a firm to display and execute a limit order in its Nasdaq quote.
The filing also includes a reduction in the ACT automated give-up (AGU) reporting fee. Nasdaq will now charge a flat fee of $0.029 per side. The previous charge ranged from a minimum of $.04 to a maximum of $0.75 per side.
"When trades are reported through Nasdaq's AGU feature, broker/dealers, clearing firms and investors receive an extra layer of risk management protection not found in alternative market centers," said Dean Furbush, executive vice-president, Nasdaq Transaction Services. "Credit management is a key component of reporting trades to Nasdaq's ACT system via the AGU feature. AGU provides clearing firms with better intelligence about their customers' overall trading activity and the ability to detect unusual trades on a real-time basis, thus preventing erroneous trades from continuing through the clearing and settlement process."
"We are dramatically reducing the cost of this service in order to encourage its use by firms as it has tremendous value to investors," Furbush continued. "Our focus is to provide firms with the best mix of transparent markets, ease of access to those markets, reliable technology, and fair regulation at a competitive cost."
The second rule filing submitted to the SEC, which is subject to its approval, will introduce a differentiation in pricing by making a participant's level of fees and revenue sharing dependent on the extent of its trade reporting through Nasdaq. Specifically, market participants that use Nasdaq as their market of choice for trade reporting will retain the low transaction fees and high market data revenue sharing that they currently enjoy, while market participants that cherry-pick among Nasdaq's market services will be charged somewhat higher fees.
If a firm reports at least 95 per cent of trades into Nasdaq's ACT, it will be categorized as a 'full contribution member.' The firm will continue to be eligible for all transaction fees currently offered including the just-announced reductions. Firms that report less than 95 per cent of trades into Nasdaq's ACT will be categorised as a partial contribution member.
The per-share charge for the execution of orders in SuperSoes will be $0.0025 per share for partial contribution members; it will remain $0.002 per share for full contribution members. For partial contribution members, Nasdaq's new quotation update fee, which went into effect on 1 February 2002, will be $0.02 per quotation update, but will remain $0.01 per update for full contribution members. Finally, Nasdaq's new market data revenue sharing programme, which will go into effect on 11 February 2002, will only be available to full contribution members.