NYSE Euronext plans Retail Liquidity Pilot Program

NYSE Euronext Retail Liquidity Pilot Program filing promotes cost savings through price improvement to individual investor orders on the NYSE and NYSE Amex

12/10/2011

NYSE Euronext (NYX) filed a proposal with the U.S. Securities and Exchange Commission (SEC) to establish a first-of-its-kind Retail Liquidity Program on a pilot basis that would produce cost savings for individual investors through price improvement on retail order flow for New York Stock Exchange and NYSE Amex listed equity securities.

"Offering price improvement for retail orders within an exchange environment affords individual investors new economic incentives and ensures greater transparency, liquidity and competition throughout the U.S. cash equities marketplace," said Joseph Mecane, Executive Vice President, NYSE Euronext. "The Retail Liquidity Program will be complementary to existing marketplace offerings to retail investors and will be utilized both by retail firms directly as well by as intermediaries that service retail order flow providers."

Under the proposed rule change, which is subject to SEC approval, there will be two new classes of market participants on the New York Stock Exchange and NYSE Amex:

  • Retail Liquidity Providers ("RLPs"), which would be required to provide potential price improvement for Retail Orders in the form of non-displayed interest that is better than the best protected bid or the best protected offer ("PBBO"). Similar to our other dedicated liquidity provider programs, RLPs would receive certain economic benefits in exchange for meeting performance obligations; and
  • Retail Member Organizations ("RMOs"), which would be eligible to submit certain retail order flow ("Retail Orders") to the Exchange. Retail Orders are generally defined as unmodified agency orders that originate from a natural person.

Member organizations other than RLPs would also be permitted to submit Retail Price Improvement Orders.

The Retail Liquidity Program is an electronic program that would require participants to improve the PBBO by a certain minimum increment, benefiting the retail investor's execution price. Operating similar to a Dutch-auction whereby executions occur at the price that completes the transaction, each transaction will include a rebate for RMOs and a fee for RLPs who interact with the Retail Orders.

The Retail Liquidity Program filings for NYSE and NYSE Amex listed securities can be found at:

http://www.nyse.com/nysenotices/nyse/rule-filings/pdf?file_no=SR-NYSE-2011-52&seqnum=1

http://www.nyse.com/nysenotices/nyseamex/rule-filings/pdf?file_no=SR-NYSEAmex-2011-79&seqnum=1