The Ontario Securities Commission (OSC) is seeking comment on Nasdaq CXC Ltd.’s (Nasdaq Canada) plan to launch a new trading incentive program on Nov. 1, the OSC announced Thursday.
Nasdaq Canada is planning to revise its trading fee model “to incentivize high quality competitive passive order flow,” the OSC states in a notice, which should boost trading volume and enhance market quality.
The program features two new fee rebates — a NBBO setting incentive and a liquidity adding incentive — which would provide traders with rebates for passive, lit orders that result in trades in both senior and venture securities.
“The CXC Trading Book is a protected lit venue. By creating an incentive for passive lit orders and requiring that these orders must trade in order to be considered for the additional rebate, the program will encourage a more robust price discovery mechanism for the protected NBBO while discourage order flow directed to unprotected venues,” states Nasdaq Canada in a notice.
Nasdaq Canada expects the new program to benefit active traders. By improving prices, “participants will benefit from tighter spreads and in turn lower implicit trading costs,” the Nasdaq Canada notice states.
Comments on the proposed changes should be submitted by Oct. 8 to the OSC and Nasdaq Canada.