NYSE Euronext is set to mirror its recently launched US retail initiative with a similar service in Europe that is designed to reduce trading costs for retail investors.
The new Retail Matching Facility, which will come into effect by the end of the year subject to regulatory approval, will allow members to execute retail flow against liquidity provided by a new subset of members known as retail liquidity providers.
The service will be available to members of NYSE Euronext’s European cash markets for the component securities of the AEX, BEL20, CAC 40 and PSI 20 indices and will let orders from retail liquidity providers trade against retail members. Retail members’ order flow will be eligible to trade against all of the liquidity on NYSE Euronext’s central order book.
The scheme is based on the existing price-time priority principle within the limits of the best bid and offer spread of NYSE Euronext’s order book.
Applications are open from now until 16 November for members wanting to apply to become a retail member organisation or a retail liquidity provider under the new scheme and the opening date for the Retail Matching Facility will be confirmed in early November.
This is the second major initiative announced this year to support retail flow from NYSE Euronext, and competing venues have launched similar programmes.
On 1 August, NYSE Euronext launched a corresponding programme on its US bourse. The service allows retail brokers to connect directly to the exchange and receive rebates for sending orders to the bourse and match flows against designated market making firms that benefit from trading fee discounts for providing liquidity. Under the scheme, retail brokers have to submit orders that offer a price improvement that is a minimum increment over the protected best bid and offer.
In mid-August, BATS BYX Exchange challenged the NYSE retail liquidity programme by announcing its own similar one-year pilot programme, designed to allow retail orders to match against each other and provide price improvement relative to the national best bid or offer.