Nasdaq OMX Europe, an exchange-backed multilateral trading facility, has introduced a new onward routing strategy, reinforcing the value of redirecting trades to its business model.
The new PRIM (pronounced ‘prime’) strategy will first attempt to execute an order on Nasdaq OMX Europe’s order book at a price equal to or better than the European best bid and offer (EBBO). If a match is not found, PRIM will then post a passive order to the primary listing market, where it will remain until filled or cancelled.
However, PRIM will not route orders to the London Stock Exchange (LSE) because of the one basis point fee the LSE charges other displayed venues for posting passive liquidity on its order book. Nasdaq OMX Europe’s other reactive routing strategies will continue to include the LSE as a destination.
Nasdaq OMX Europe is the only MTF to offer onward routing at present, in conjunction with broker Citi’s high-speed execution platform. Routing has become a key feature of Nasdaq OMX Europe’s service offering, as overall matched volumes remain low. The firm has already released a number of other routing strategies, including SCAN, which directs orders to all accessible markets in search of a price better than or equal to the EBBO, after first looking for a match on Nasdaq OMX Europe.
“The routing business is taking off and is significantly increasing the number of orders we connect with,” Todd Golub, COO, Nasdaq OMX Europe, told thetradenews.com. “The market makers on our book place many orders, and constantly change orders and quotes so liquidity moves around a lot. We encourage firms to route through us, and are constantly engaged in interactive feedback with our customers to show them how we could have saved them money through our low pricing structure.”
According to the Fidessa Fragmentation Index, an analysis of liquidity fragmentation across European equity trading volumes, Nasdaq OMX Europe executed trades worth €29 million yesterday, accounting for 0.12% of total European liquidity.