NYSE Retail Liquidity Program

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On July 3, 2012, NYSE Euronext received approval form the SEC to establish a retail liquidity program, a market solution for improving retail equities trading order flow by increasing cost savings and improving prices for individual investors. The execution alternative differentiates itself from other platforms by publicly indicating when price improving liquidity is available in the markets. The program, which began in August 2012, directs trades from retail investors onto a special platform where trading firms can bid to offer them the best price. The result will create two new classes of market participants: [1]

  • Retail Liquidity Providers (RLPs), services that would be required to price improvements for certain retail orderflow in a form of interest that is better than the best protected bid/offer. RLPs would receive certain economic benefits in exchange for meeting obligations.
  • Retail Member Organizations (RMOs), organizations that would be eligible to submit retail orders to the Exchange.

NYSE will disseminate an indication whenever there is liquidity available at a price better that the PBBO to the Consolidated Quote System and its proprietary feeds. The exchange plans to send out semi-blind messages called “retail liquidity identifiers,” or liquidity flags, to participants. The messages divulge symbol and side, but not size or price. Market Makers will be allowed to post hidden quotes in sub-penny increments that may only be traded against by qualified retail brokers.[2]

The program, criticized by many as a dark pool, is claimed to differ from the venue type because wholesalers must provide prices that match or improve upon levels in the public markets, whereas dark pool operators can keep that information confidential.

John Lothian News Interview[edit]

NYSE Euronext’s Joe Mecane Discusses Their New Retail Liquidity Program
Joe Mecane is executive vice president and co-head of U.S. listing and cash execution at NYSE Euronext. He spoke with JLN senior editor Sarah Rudolph from the floor of the NYSE about the exchange’s new Retail Liquidity Program, which is set to launch on August 1, 2012.

The new program is designed to attract retail traders by offering them better price improvement than the National Best Bid and Offer (NBBO). Orders placed through the program would interact with non-displayed retail price improvement orders provided by retail liquidity providers. Published July 30, 2012.[3]