Wednesday, February 27, 2013

Equity Trader Alert #2013 - 15
NASDAQ OMX Introduces the QDRK and QCST Routing Strategies, Effective February 27, 2013

Markets Impacted:

Contact Information:

What you need to know:

  • On Wednesday, February 27, 2013, NASDAQ will introduce two new routing strategies, QDRK and QCST.
  • NASDAQ has updated technical specifications to reflect these new strategies.

What are the new routing strategies?

Effective Wednesday, February 27, 2013, The NASDAQ Stock Market® (NASDAQ®) will offer QDRK and QCST, two new routing strategies that provide favorable economics to our members. QDRK is a low cost routing strategy which simultaneously accesses NASDAQ and low cost liquidity venues. QCST behaves similarly to QDRK, with the exception that QCST additionally accesses the BX, EDGA and BATS-Y exchanges.

NASDAQ has updated the following protocol specifications to reflect these new strategies:

  • CTCI
  • INET FIX
  • OUCH
  • QIX
  • RASH

How will QDRK orders be routed?

Orders sent using the QDRK strategy will behave as follows:

  1. The order will simultaneously check the NASDAQ book and route the remaining shares to low cost liquidity destinations that are not Reg NMS Protected Quotes.
  2. If the order is marked as Immediate or Cancel, any remaining unexecuted shares will be cancelled.
  3. If the order is any other time-in-force, any remaining unexecuted shares will post to the NASDAQ book.
  4. After posting on the NASDAQ book, a QDRK order will not route out if it is subsequently locked or crossed.

How will QCST orders be routed?

Orders sent using the QCST strategy will behave as follows:

  1. The order will simultaneously check the NASDAQ book and route the remaining shares to low-priced destinations that are not Reg NMS Protected Quotes and certain low cost exchanges.
  2. If the order is marked as Immediate or Cancel, any remaining unexecuted shares will be returned.
  3. If the order is any other time-in-force, any remaining unexecuted shares will post to the NASDAQ book.
  4. After posting on the NASDAQ book, a QCST order will not route out if it is subsequently locked or crossed

What is the pricing for sending orders using the new strategies?

Pricing for the execution of orders using the new strategies will be as follows:

QDRK QCST
Fee to Remove Liquidity on NASDAQ $0.0029 $0.0029
Rebate to Remove Liquidity on BX - $0.0014
Fee to Remove Liquidity from Other Destinations $0.0005 $0.0005
Rebate to Add Liquidity on NASDAQ Rebate based on firm's tier Rebate based on firm's tier

Can I trade all U.S. equities using these new strategies?

Like every NASDAQ routing strategy, QDRK and QCST are eligible for all Reg NMS securities.

How will I know where the order executes?

The following liquidity codes will identify where a trade executes when using the QDRK or QCST strategies:

Execution Venue QDRK QCST
Add on NASDAQ A, k, 7, 8 A, k, 7, 8
Remove on NASDAQ R, m, 6 R, m, 6
BX - B
Other X X

Where can I find additional information?


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About the NASDAQ OMX Group:
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with more than 3,600 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit www.nasdaqomx.com.

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