If you remember GI Joe, you may also recall every episode ending with GI Joe saying, “Knowing is half the battle.” The idea put forth was that “knowing” was the impetus of change. Change that would lead to a better outcome because of the lesson that was learned.

SEC Rule 10b-18 sets the requirements for corporate stock buybacks and the rule’s “safe harbor,” which allows companies to purchase their shares in the open market without concern that their activities could later be deemed to be manipulative under the law.  One of the requirements of the Rule 10b-18 safe harbor is that brokers buying stock for an issuer must buy at a price that is no greater than the higher of the last independent bid price or the last sale price.

In our initial observation of the Tick Size Pilot*, we found a shift in liquidity from off-exchange venues to exchanges in G3 and a shift from maker/taker to inverted exchanges across all test groups. However, we did not observe the same increase in impact costs that other studies found. We concluded that the pilot may be showing signs of improved liquidity capture for institutional investors and we committed to measure and report the results of the pilot in the future.

M-ELO, Nasdaq’s Midpoint Extended Life Order, is a new order type that is designed to attract longer term investors to interact with each other by trading against other M-ELO orders at the midpoint of the NBBO.

The views of many broker-dealers are often underrepresented in the ongoing debate over market structure reform, but not understanding the impact that trading regulations may have on those broker-dealers can cause many unintended consequences. 

In our recent comment letter to the SEC, we are in support of NASDAQ’s proposed new order type the Midpoint Extended Life Order, AKA MELO. 

Bats recently filed a proposal with the SEC to provide brokers with a market-on-close (MOC) order type that would provide them with the closing price auctions on the NASDAQ and New York Stock Exchange, for stocks listed on those exchanges, but with lower execution fees.

We’ve released our insights on the Tick Size Pilot (TSP). We’ve analyzed our data to assess market structure changes as a result of the pilot, as well as the performance of our algorithmic strategies.

As an independent agency broker-dealer, and provider of tools to assist other broker-dealers in routing, execution, pre- and post-trade compliance and risk monitoring, we have a significant interest in ensuring that the fees exchanges charge for access and connectivity services are fair and equitable, and allow for the most orderly, efficient and competitive markets possible.