Nasdaq OMX Europe, the pan-European MTF operated by global exchange group Nasdaq OMX, has no plans to change its BLNK routing strategy despite its parent’s withdrawal of FLASH, a similar strategy, in the US.
On 6 August, Nasdaq OMX and fellow US exchange BATS voluntarily withdrew their respective versions of so-called flash order types – which display unfilled, marketable orders on venues’ data feeds, but not the consolidated tape, for 25 milliseconds before routing them elsewhere – in response to controversy and the threat of potential regulatory intervention. Both venues’ order types will be suspended from 1 September.
US trading venue Direct Edge, while suspending plans for a similar order type, Flare, chose to maintain its enhanced liquidity provider (ELP) programme, introduced in 2006, which sends indications of interest detailing unfilled orders to external liquidity providers before routing elsewhere.
“We do not at this time have plans to change the BLNK order type, given BLNK orders are fully disseminated from our Neuro data feed (ITCH),” Nasdaq OMX Europe said in a written statement to theTRADEnews.com. “We do not have a consolidated data feed in Europe and so the BLNK orders are available to be seen by everyone.”
BLNK offers users the ability to have their primary-exchange-routed orders posted to the Nasdaq OMX Europe order book for 25 milliseconds before being routed on to the primary markets.
The voluntary abolition of flash orders in the US follows concerns aired by officials at the Securities and Exchange Commission (SEC) and several calls to ban the orders, the most notable being from New York senator Charles Schumer.
The issue came to a head on 4 August when Schumer posted a statement on his website claiming that SEC chairman Mary Schapiro had “personally assured” him that the agency would ban flash orders.
The principal criticisms of flash orders in the US are that they contravene the spirit of Regulation NMS’s order protection rule, which compels routing to the venue with the best price, and that they create a two-tiered market, as they give some market participants information that others are not privy to.
Europe lacks Reg NMS’s order protection rule, but some market participants have noted the potential for information leakage when details of a marketable order are displayed for a short period before execution.