US exchange Direct Edge will launch a market-making programme on 17 January as it seeks to improve the quality of liquidity on its market.
The market-making scheme will run on both of Direct Edge’s EDGA and EDGX exchanges.
“Our members asked and we delivered,” Bryan Christian, head of sales, Direct Edge, told theTRADEnews.com. “It’s our commitment to all Direct Edge members to continue to provide services they need for their business. Market-making is a designation they have asked for to help provide liquidity.”
The bourse has not yet announced any incentives yet for members that decide to become liquidity providers, but Christian added that a market-maker designation would initially offer advantages including short-selling and stock locate requirements.
“We are currently in discussions with members to determine the next phase of the market-maker program,” he added.
Rival US market operator BATS Global Markets recently announced details of its own market-making scheme on its BZX platform to support its new listings business that was launched at the end of last year. The new scheme is currently awaiting sign-off by US regulator the Securities and Exchange Commission and will see BATS’ members compete for a daily reward by posting competitive quotes in a stock or exchange-traded products, based on their continuous daily quoted size at the national best bid/offer in the securities for which they are registered liquidity providers.
Also towards the end of 2011, electronic market makers Virtu Financial and GETCO purchased the designated market making (DMM) businesses of Cohen Capital and Bank of America Merrill Lynch respectively.