The Chicago Stock Exchange changed its pricing for trades in Nasdaq-listed securities this month to reflect the move of some of the exchange’s matching technology to Secaucus, New Jersey.
Beginning November 2, the Chicago exchange reduced its fee for taking liquidity in all Nasdaq Stock Market securities to 6 cents per hundred shares from 30 cents. At the same time, the exchange increased its rebate for providing liquidity from zero to a penny per hundred shares.
The pricing change follows the Chicago exchange’s decision to move its technology used to match trades in New York Stock Exchange-listed (Tape “A”) and Nasdaq-listed (Tape “C”) securities from Chicago to the Equinix NY4 data center in Secaucus. The purpose was to reduce latency for East Coast-based trading firms, according to a notice on the exchange operator’s website.
The Chicago expects the combination of lower latency and the cheaper take fee to appeal to liquidity providers looking for a fast fill.
The cheaper take fee will draw the takers, which will, in turn, attract the providers. Liquidity takers are often retail and institutional brokers. Liquidity providers are often market makers and other professional traders.
Technology for matching trades in securities listed on other exchanges such as NYSE Arca and NYSE MKT as well as the Nasdaq-listed QQQs will remain in Chicago. By volume, the bulk of those Tape “B” securities are exchange-traded funds. The exchange decided to keep that matching engine in Chicago due to its proximity to the city’s futures markets, according to the exchange.
