Nasdaq Market Center Systems Description

market participants and services bureaus to develop their own front-end software.  Thus, 

a market participant is provided with choice at all stages of market access to ensure 

maximum accessibility.  The market participant can use Nasdaq front-end software or 

software provided by a service bureau, or can develop its own software, and can then 

connect terminals running the software to Nasdaq through a variety of connectivity 

methods, using a variety of telecommunications protocols.   

Market participants must also execute a subscriber agreement and be a participant 

in, or have an access arrangement with a participant in, an SEC-registered clearing 

agency.  In addition, the subscriber must also agree to comply with all applicable rules 

and accept all trades identified by the Nasdaq Market Center as being effected by the 

participant. 

 

IV. 

Nasdaq Market Center Quote and Order Display  

 

Nasdaq offers market participants a variety of options for viewing quotes and 

orders in the Nasdaq Market Center.  Using Nasdaq Level 1 Service, market participants 

receive the best bid and offer of Nasdaq and each other market center trading Nasdaq 

stocks, as well as last sale data.  Through the Nasdaq Quotation Dissemination Service 

(“NQDS”), market participants receive the best bid and offer displayed under each 

Nasdaq MPID.  Via the TotalView data feed, participants can view all displayed trading 

interest available in the Nasdaq Market Center (i.e., the full depth of the Nasdaq book).   

 

V.  

Entry and Processing of Quotes/Orders  

 

Market participants may submit multiple quotes and orders at multiple price 

levels, which Nasdaq manages and displays, consistent with the parameters of each quote 

or order.  Nasdaq time-stamps each order or quote upon receipt.  The time stamp 

determines the ranking for execution purposes.  Each order and quote increment receives 

a separate time stamp to ensure that quoting participants will not lose time priority for 

updating their displayed trading interest to show greater size.  Once a market participant’s 

displayed size is diminished to zero, it no longer retains time priority, even though it may 

have a feature that automatically refreshes its displayed size.  

 

Market orders and marketable limit orders are directed to displayed quotes/orders 

for execution.  Quotes and non-marketable limit orders are displayed and made available 

for execution by incoming orders.  Upon entry of a market order or marketable limit 

order, the Nasdaq Market Center identifies the next market participant in queue to receive 

an order.  If that participant accepts automatic executions, the system will automatically 

execute against that participant and send it an execution report.  Immediately upon 

execution, the system generates an execution report.  If the market participant is an ECN 

that has elected to participate in the Nasdaq Market Center as an order delivery 

participant, the system will deliver orders rather than executions.   

 

 

 

 

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VI. 

Order Types and Time-in-Force Designations 

 

Upon exchange registration, all orders in the Nasdaq Market Center will be forms 

of non-directed orders.  A non-directed order does not identify a specific party to which 

the order should be delivered or against which the order should be executed, but rather is 

executed or delivered in accordance with price/time priority.  An order may be of a size 

up to 999,999 shares and must indicate whether it is a buy, sell, sell short, or sell short 

exempt.  The following order types and time-in-force designations are available in the 

Nasdaq Market Center during regular trading hours:

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•

 

Market orders are un-priced orders to buy or sell at the market’s current best 

price.  

•

 

Limit orders are orders to buy or sell at a specified price or better.  

•

 

Auto-Ex orders, which are available only for Nasdaq-listed securities, execute 

solely against the quotes/orders of Nasdaq Market Center Participants that 

participate in the automatic execution functionality of the Nasdaq Market 

Center and that do not charge a separate quote-access fee.  Auto-Ex orders are 

cancelled before they trade through the quote or order of a Nasdaq Market 

Center participant that is not eligible to receive them or if they would lock or 

cross such a quote or order.  

•

 

Fill or Return orders, which are available only for non-Nasdaq listed 

securities, are executable only to the extent that they can be executed by 

Nasdaq Market Center Participants without routing the order to an exchange 

through the Intermarket Trading System (an “ITS Exchange”) and without 

trading through the quotations of ITS Exchanges.  

•

 

Pegged orders, which are available only for Nasdaq-listed securities, have 

prices that are automatically adjusted in response to changes in the Nasdaq 

Market Center inside bid or offer, as appropriate.   

•

 

Discretionary orders have both a displayed bid or offer price and a non-

displayed discretionary price range in which the market participant is also 

willing to buy or sell, if necessary.   

•

 

Summary orders are rejected if they are marketable when received by the 

Nasdaq Market Center. 

•

 

Sweep orders, which are available only for use by market makers in non-

Nasdaq listed securities, are delivered to or executed by Nasdaq Market 

Center Participants at multiple price levels and may trade through the 

quotations of ITS Exchanges. 

                                                 

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As described below, additional order types are used during the market open and 

market close.  

 

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