Nasdaq Proposes Amendments to Designated Liquidity Provider and Market Quality Supporter Programs for ETPs
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The Nasdaq Stock Market LLC filed a rule change to modify its incentive programs for Exchange-Traded Products in Equity 7, Section 114. The amendments adjust qualification requirements for the Designated Liquidity Provider (DLP) and Market Quality Supporter (MQS) programs by reducing the number of Market Quality Metrics (MQMs) that must be met, removing the mandatory inclusion of Auction Spread metrics for DLPs. Nasdaq also clarifies that Auction Spread calculations use the Nasdaq Market Center best bid and offer directly before each auction. Additionally, new DLP allocations and new ETP launches will now automatically qualify for incentives for both the current month and the following month, extending the previous single-month waiver. These changes aim to better align incentives with achievable liquidity outcomes after the shift to prior-month performance evaluation.
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Key Changes
- DLP no longer required to meet Auction Spread (opening and closing) as part of the 5 of 7 MQMs needed for incentives
- MQS qualification reduced from meeting all 4 MQMs to only 2 of 4 MQMs
- Auction Spread metrics clarified to be based on QBBO directly before each auction with specific notional depth and basis point requirements
+ 3 more changes with Pro