Nasdaq OMX Group said it expects the re-launch of its PSX exchange as an exchange-traded fund marketplace to take place in May.

Final approval of the refashioning the "price size exchange" as a "price time" exchange focused on exchange-traded products must come from the Securities and Exchange Commission.

The exchange operator hopes to encourage trading in a wider variety of ETPs by created two types of market participants -- Registered Market Maker and PSX Supplemental Liquidity Providers -- which will take "affirmative quoting" obligations.

PSX also intends to create competition among market makers, by offering the largest rebate to a Lead Market Maker. Other registered market makers can compete for that designation and while making markets in ETPs receive rebates, at a lower level.

Rebates to liquidity providers can be as high as $.0028 per added share, according to a PSX pricing page. Fees to remove liquidity start at $0.0030 per .

"PSX is a key piece of our larger strategy to better service the ETP industry with a platform designed to incent high-quality liquidity, market incentive programs and ETP-specific functionality." said Eric Noll, Executive Vice President of Transaction Services U.S. and U.K. at Nasdaq OMX, in a statement Monday.

The relaunch of PSX will create a second market that is focused on ETPs. NYSE Euronext's Arca exchange currently operates as an ETF-focused exchange. NYSE Arca has both the largest market share in exchange-traded trading among national exchanges and 93 percent of ETP listings.

The move comes roughly two and a half years after PSX was created as a Price Size Exchange that would give priority to the size of an order over the speed of arrival.

Nasdaq OMX CEO Robert Greifeld at the time called this the "most fundamental change in market structure" since the launch of the all-electronic Nasdaq Stock Market itself in 1971.

But the idea that "size matters'' never took hold. In February, PSX accounted for three-fourths of one percent of total equities trading in the United States.

Exchange-traded funds have been one of the fastest-growing segments of equities trading. These are, in effect, mutual funds that have the added advantage of being able to be traded at any point during a trading session. The share prices as well as trades in mutual funds are set after markets close. ETFs also typically have lower costs than mutual funds, charging fees for trading in their shares, where mutual funds charge annual fees for managing their holdings.

The modern ETF industry was started 20 years ago, with the launch by State Street Corporation of the SPDR S&P500 fund, known as SPY and whose holdings passively reflect the components of the Standard & Poor's 500 Index.

Now, $1.3 trillion is held in 1,158 exchange traded funds in the United States, according to ETFGI, a London-based research firm. Altogether, $1.4 trillion is held in 1,443 ETFS and other exchange-traded products.

Investors will be able to place buy or sell orders on all ETFs and ETPs listed on the NYSE Arca exchange, BATS Exchange or Nasdaq Stock Market. But PSX will not be a listing market, at least for the foreseeable future.

The Nasdaq Stock Market handled an average of 1 billion shares a day of trading in February, according to statistics kept by BATS Global Markets. The PSX exchange handled an average of about 50 million shares.

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