Dear Members,
The way that technology has transformed our markets has been a topic of constant discussion in recent years. Direct Edge believes these changes have undeniably improved the trading experience of both investors and intermediaries. At the same time, these changes have had a profound impact on how our market operates, how resources are used, and the nature of responsible market participation. Direct Edge believes that as one of the nation’s — and the world’s — largest stock market operators, we are in a position of leadership and understanding, which make us well positioned to drive the dialogue forward in a way that gives market participants the flexibility they need, while giving the investing public increased confidence that this technological transformation is occurring responsibly.
Accordingly, Direct Edge is proud to announce the introduction of the Message Efficiency Incentive Program (“MEIP”). Subject to Securities and Exchange Commission (“SEC”) approval, effective May 1, 2012, Members of EDGA Exchange, Inc. and EDGX Exchange, Inc. will receive standard rebates only in instances where the Member’s average monthly inbound message-to-trade ratio is at or less than 100 to 1. Members with a monthly average of more than 100 to 1 will have their rebate reduced by $0.0001 per share, regardless of the tier for which they would otherwise qualify. (Note: Inbound messages are defined to include orders, cancels, and cancel/replace messages.) Because of their importance in liquidity provision and their ongoing quotation obligations, registered Direct Edge Market Makers will be exempt from the MEIP provided they satisfy certain minimum obligations.
The objective of the MEIP is to continue to provide Members with order-management flexibility, while acknowledging the benefits to the market that come with more efficient participation. Members are still free to manage their order and message flow as they desire. Our technology and infrastructure continues to be ready for high-volume and high-volatility situations, and additional safeguards remain in place to protect our markets from excessive message traffic. We believe the promotion of a more efficient marketplace will enhance the trading experience of all our Members on an ongoing basis.
It is important to balance the critical importance of technology to liquidity provision and market operation with effective message traffic efficiency incentives to acknowledge the costs that message traffic has on today’s markets. Direct Edge believes that programs like the MEIP will promote confidence in the benefits that technology has brought to our nation’s markets.
Please feel free to contact me directly to discuss this further, or reach out to your Direct Edge Sales Representative. Thank you for your continued support.
Sincerely,
Bryan Harkins
Chief Operating Officer
Direct Edge
FTSE Mondo Visione Exchanges Index:
Direct Edge Introduces Message Efficiency Incentive Program
Date 07/03/2012