NASDAQ Vendor Alert #2007-050 - NASDAQ to Introduce Options NOIView Data Feed in Coordination with the Launch of the NASDAQ Options Market
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Summary:
NASDAQ has announced plans to launch the NASDAQ Options Market, an equity and index options market that will leverage NASDAQ’s high performance technology and far-reaching connectivity, in the fourth quarter of 2007, pending approval of the Securities and Exchange Commission (SEC).
As an added benefit to options traders, NASDAQ will utilize its successful matching functionality to offer Opening and Closing Auctions for equity and index options.
To facilitate price discovery in the minutes leading up to the Opening and Closing Auctions, NASDAQ will introduce an Options NOIView data feed as part of the NASDAQ Options Market launch.
Overview:
The NASDAQ Stock Market® will launch an equity and index options market in the fourth quarter of 2007, pending SEC approval. In developing the NASDAQ Options Market, NASDAQ® will leverage its core strengths of high performance technology and far-reaching connectivity to operate a fully electronic trading system developed to trade options. The NASDAQ Options Market system will provide for the electronic display and execution of orders in price/time priority without regard to the types of entities entering orders and will offer immediate and automatic price improvement to orders. All NASDAQ members will be eligible to participate in the NASDAQ Options Market system, either as order-entry firms or market makers. The system will also provide a routing service for orders when trading interest is not present on NASDAQ Options Market and will link with and comply with the obligations of the Options InterMarket Linkage.
As outlined in its proposed rules, NASDAQ plans to offer an Opening and Closing Auction process for equity and index options that will facilitate price discovery by crossing options orders at a single price. To ensure full transparency, NASDAQ will calculate and disseminate indicative clearing prices and net order imbalance information in the minutes leading up to the auction processes. Because the calculation includes non-displayable as well as displayable order types, the Net Order Imbalance Indicator (NOII) will provide the best predictor of the options cross prices going into the market open and market close.
Market Data Impact:
NOII Data:
In association with the NASDAQ Options Market launch, NASDAQ will introduce Options NOIView, a new proprietary data feed designed to carry NOII data for the Opening and Closing Auctions. To access the Options NOIView technical documentation, please refer to the NASDAQ Data Products – Direct Data Feed Specifications page.
In response to customer networking needs, NASDAQ will offer Options NOIView data feed in TCP/IP protocol as well as IP multicast. The Options NOIView bandwidth recommendation will be 8 Megabits (Mb) per data center connection. For firms looking to save on networking costs, NASDAQ will also offer a compressed TCP/IP version of the Options NOIView feed that will require 75% less bandwidth. For information on how to access the proprietary data feeds, please refer to the NASDAQ Connectivity Providers document.
Quotation and Trade Data:
Upon initial implementation, NASDAQ will provide its NASDAQ Options Market best bid and offer (BBO) quotation and trade data via the Options Price Reporting Authority (OPRA) data feed.
Once NASDAQ Options Market is fully operational, NASDAQ plans to work with the market participants and market data community to determine customer demand for proprietary options data products, including depth and analytical data feeds.
Contact Information:
For additional information on the NASDAQ Options Market, please contact the NASDAQ Options Team.
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NASDAQ is the largest U.S. electronic equities exchange. With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other U.S. electronic market. It is home to companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology. NASDAQ is the primary market for trading NASDAQ-listed stocks as well as a leading liquidity pool for trading NYSE-listed stocks. For more information about NASDAQ, visit the NASDAQ Trader website at www.NASDAQTrader.com.
