05.06.2020

Nasdaq Enhances Holding Period for Midpoint Extended Life Order

Nasdaq created the Midpoint Extended Life Order (M-ELO) in 2018 to help institutional investors with longer-term investment horizons interact with each other at the midpoint of the National Best Bid and Offer (NBBO). There is a built-in holding period before a M-ELO order can be executed, to protect M-ELO orders from negative price impact.

Nasdaq recently announced a reduction in the holding period from 500 milliseconds, or half a second, to 10 milliseconds:

Effective Monday, May 11, Nasdaq is optimizing the M-ELO timer by reducing the holding period from 500ms to 10ms. This enhancement will broaden the spectrum of order type use-cases and opportunities while sustaining its strong performance characteristics. M-ELO remains the highest performing order type among its peers, providing a purpose-built midpoint solution to minimize market impact on the single largest exchange in the U.S.

Benefits of M-ELO and M-ELO + Continuous Book Orders:

· Interact with like-minded investors

· Increased availability for algo and routing strategies

· Highest quality of execution at the midpoint of the NBBO

During March’s unprecedented volatility, M-ELO’s quote stability remained consistent and the M-ELO order type outperformed all other venues, including those offering a delay mechanism.

Absolute market response shows the low impact and trade footprint of a M-ELO execution.

#TradeTalks

To better understand the benefits of M-ELO, as well as the market response to the recent periods of volatility, tune into #TradeTalks with Nasdaq Global Markets Report Jill Malandrino.

#TradeTalks: Nasdaq M-ELO Order Type Enhancements with Reduced Holding Period

Featuring: Andrew Oppenheimer, AVP, U.S. Equities

#TradeTalks: Spreads, Liquidity, Routing and Nasdaq’s Midpoint Segment Called M-ELO

Featuring: Chuck Mack, Head of U.S. Equities

For more information regarding M-ELO, please reach out to sales@nasdaq.com.

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