Exchange operator Nasdaq OMX Group is gearing up to re-launch its trading platform, PSX, in a move to create a specific marketplace for exchange-traded products (ETPs).
The price-time exchange will offer incentives to firms acting as market makers with programmes and features designed to provide robust liquidity by regularly buying and selling the ETPs at the publicly quoted price to institutional and retail investors.
"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, executive vice president of transaction services for the US and the UK at Nasdaq OMX. "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 programmes and ETP-specific functionality."
Nasdaq OMX's PSX will offer registered market maker and PSX supplemental liquidity provider (XLP) designations to market participants who undertake a quoting obligation on the exchange. These market making programmes are aimed at providing liquidity to those issuers who meet quoting requirements on a per-security basis.
In addition, PSX also plans to introduce a lead market maker (LMM) programme designed to narrow spreads and to increase the displayed size of ETP securities.
PSX-registered market makers may compete for LMM status in ETP securities and will receive enhanced benefits in exchange for assuming enhanced liquidity provision obligations.
Nasdaq OMX will provide market participants with a choice of three different models for US equity trading: Nasdaq Stock Market; Nasdaq OMX BX; and PSX for trading on a platform designed specifically for ETPs.
PSX is planned for re-launch later this month, pending approval from the US Securities and Exchange Commission.