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Nasdaq OMX to Re-Launch PSX for Exchange Traded Products

Offers new market maker programs with economic incentives to reward individuals who meet quoting requirements on a per-security basis.

Nasdaq OMX said it plans to re-launch Nasdaq OMX PSX in a move to create a leading market for exchanged traded products (ETPs). It will change PSX to a price-time exchange offering unique market making programs and features designed to provide liquidity to institutional and retail investors.

PSX will re-launch in May 2013, pending approval from the Securitie and Exchange Commission.

PSX will offer Registered Market Maker and Supplemental Liquidity Provider (XLP) designations to participants that undertake an affirmative quoting obligation on the exchange. Superior economics will be offered to those that meet quoting requirements on a per-security basis to ensure committed liquidity is available.

PSX also plans to introduce an innovative, competitive and transparent Lead Market Maker program designed to narrow spreads and increase displayed size in ETP securities, according to the release. PSX registered market makers may compete for LMM status in ETP securities and will receive enhanced benefits in exchange forassuming enhanced liquidity provision obligations. In addition to receiving superior economics in the ETPs they lead, LMMs will be promoted by PSX to the ETP issuer and investor communities.

"We're focused on delivering long-term value to investors by significantly broadening the asset classes we offer to our member firms, and the establishment of a preeminent marketplace for ETPs supports that effort," said Eric Noll, EVP of Transaction Services U.S. and U.K. at NASDAQ OMX, in the release. "PSX is a key piece of our larger strategy to better service the ETP industry with a platform designed to incent high-quality liquidity, market incentive programs and ETP-specific functionality."

Nasdaq OMX now gives market participants the ability to choose from three different models for U.S. equity trading, including The Nasdaq Stock Market, Nasdaq OMX BX and now PSX for trading in an ecosystem designed specifically for ETPs. PSX will use Nasdaq OMX's proven INET technology, enabling market participants to execute trading strategies across ETPs and other asset classes. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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