NYSE Euronext announced that it has received regulatory approval for a new program designed to attract retail order flow by providing price improvement on it.
The NYSE reports that the U.S. Securities and Exchange Commission (SEC) has approved its plans to introduce a market innovation that it says will produce cost savings for individual investors by providing price improvement on retail order flow. The Retail Liquidity Program, which is expected to launch on Aug. 1, will require participants to improve on the best bid and offer by a certain minimum amount.
The new program is intended for use by retail brokerage firms directly and market intermediaries that service retail order flow providers. In a regulatory filing with the SEC, the NYSE says that the program is designed to attract more retail order flow to the exchange.
Under the program, the NYSE will establish two new classes of market participants, retail liquidity providers (RLPs) and retail member organizations (RMOs). RLPs would be required to provide price improvement for certain retail order flow in exchange for “certain economic benefits”; and RMOs would be eligible to submit retail orders to the exchange.
“The Retail Liquidity Program is an attractive trade execution alternative for individual investors,” said Joseph Mecane, executive vice president, NYSE Euronext. “Providing price improvement for retail orders within an exchange environment affords individual investors new economic incentives and ensures greater transparency, liquidity and competition throughout the U.S. cash equities marketplace.”