Nasdaq Withdrew Retail Post-Only Order Proposal

Nasdaq proposed to the SEC, in October of 2016, a request to change and adopt a new Retail Post-Only Order.  This was dubbed by the group over at Themis Trading, LLC as Post Only Order for Retail (POOR).  The Retail Post Only Order was essentially designed to aid retail brokers in avoiding access fees.  It would have allowed for the order to be cancelled for any reason, instead of completing with an adjusted price.  Nasdaq considers this ‘choice’ as ‘competition’ that is good for markets.  

We will have to agree with Themis Trading on this one, as we see this order proposal for what it was, another attempt by Nasdaq to give retail brokers avenues for avoiding access fees, along with undesirable retail flow execution.

This type of order would obviously violate a broker’s responsibility for best execution, simply by cancelling an order that would have been filled otherwise.  These order types contribute to a distorted price movement, all the while hindering a trader’s best execution.  By giving retail brokers strategies that could potentially hurt their clients, the SEC would be going against the very basic principles of protecting investors, both institutional and retail.  

The SEC opened the door to comments in December of 2016, deciding to take more time to review this proposal Retail Post-Only Order Proposal.   We are pleased to know that Nasdaq revoked their proposal for the rule change in January of 2017, conceivably due to the scrutiny placed on this by the Themis Trading Group.  

We are thankful to Themis for taking the time to write comment letters to the SEC with their opinions and findings on this order type proposals.  We are equally thrilled that this proposal did not come to materialization in the marketplace.

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