The Nasdaq OMX Group will launch a second U.S. equities exchange on Oct. 8, the first in the United States that will give priority to the size of an order, at a given price, the exchange operator said Monday.
Nasdaq said the exchange, to be called PSX, will be the first U.S. equity trading platform with a price-size priority model. The platform, which will be operated as a facility of the NASDAQ OMX PHLX exchange, has been approved by the Securities and Exchange Commission .
PSX will be an equity exchange model that encourages participants to display more shares at a price level. The allocation of shares is pro-rated based on a participant's size relative to the total size at that price level
According to Nasdaq's own website, PSX will offer "an attractive low take rate while still providing a rebate to liquidity providers."
For shares that execute above $1.00, transaction pricing will be: $0.0013 fee to remove liquidity, and $0.0020 rebate for adding liquidity
Nasdaq OMX also operates the Nasdaq Stock Market and an exchange it calls BX, which gives customers the ability to execute orders with price-time priority using different pricing and functionality. It also operates two options exchanges, Nasdaq Options and Nasdaq PHLX.
Nasdaq's platform is reportedly in reaction to market developments this year in which regulators are questioning how much trading should occur in unlit venues.
Eric Noll, Nasdaq OMX’s head of transaction services, told The Financial Times the company was troubled that the markets had “effectively bifurcated over time into one that’s used by end users,'' such as asset managers, “and one that’s used by professionals [high-frequency and other traders].''
In the official announcement of the launch date, Noll said PSX will "provide a different trading model for customers looking for an equity exchange that rewards size and liquidity."