Nasdaq Market Center Systems Description

condition.

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  Once on the book, however, an order will not be routed out of the Nasdaq 

Market Center, even if it becomes marketable against the quotes of another market.  

Finally, orders are not routed outside the Nasdaq Market Center during Nasdaq’s 

Opening and Closing Crosses.   

 

XII. 

The Brut ECN 

 

On September 7, 2004, Nasdaq completed its purchase of Brut, LLC, a registered 

broker-dealer and member of the NASD and the New York Stock Exchange (“NYSE”), 

and operator of the Brut ECN (the “Brut ECN” or “Brut”).

 

 As an SRO member, Brut 

remains subject to all rules applicable to its activities as a broker-dealer, including those 

requiring its participation in market surveillance and audit trail programs conducted by 

Nasdaq, the NASD, and the NYSE.  As an ECN, Brut participates in the Nasdaq Market 

Center system as an Order-Delivery ECN pursuant to the Rule 4700 Series and as an ITS 

Market Maker pursuant to the Rule 5200 Series.  Brut continues to act as a counter-party 

to all trades taking place in its system, for anonymity as well as clearance and settlement 

purposes.  Brut also continues to provide outbound order routing services to other market 

centers for its subscribers.  Brut provides the Nasdaq Market Center its full book of 

orders for display in Nasdaq. 

 

The Brut ECN is currently a "facility" of a national securities association, and 

upon exchange registration, will become a facility of the exchange operated by Nasdaq.  

As such, Nasdaq is obligated to file with the Commission rules to govern the operation of 

the Brut ECN.  

 

A.   

Order Display/Matching System  

 

The Brut ECN allows subscribers to enter market and priced limit orders to buy 

and sell Nasdaq and exchange-listed securities.  Brut acts only as an agent on behalf of its 

subscribers and engages in no proprietary trading save that necessary to correct system 

errors. Subscribers may enter multiple orders at single or multiple price levels.  

Subscribers have the option to have a portion of their order held in reserve and not 

displayed to the marketplace.  Brut, in turn, makes available to System subscribers and 

market data vendors a data feed of all displayable orders on both the bid and offer side of 

the market (excluding reserve size share amounts) for all price levels at which shares are 

available within its System.  Brut orders displayed in the Nasdaq Market Center are 

displayed under the same terms and conditions generally applicable to Nasdaq Quoting 

Market Participants.   

 

 

 

 

                                                 

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Orders returned to Nasdaq will be placed on the Nasdaq Market Center book on 

the basis of the time-stamp assigned to the order when it was originally submitted 

to the Nasdaq Market Center. 

 

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B.  

Access Standards 

 

To obtain access to the Brut ECN as a system participant, a user must 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 Brut subscriber must 

also agree to comply with all applicable rules and accept all Brut ECN trades identified 

by the Brut ECN as being effected by the subscriber.   

 

Broker-dealers may also access Brut ECN orders through the Nasdaq Market 

Center, regardless of their status as a Brut ECN participant as described above, provided 

they have met the conditions for access to the Nasdaq Market Center.   

 

C.  

Order Types  

 

The Brut ECN makes available to subscribers several order types. These order 

types are described below.  

 

•

 

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

 

•

 

Market orders are un-priced orders to buy or sell a stock at the market's current 

best price. A market order may have a limit price beyond which the order shall 

not be executed.  

 

•

 

Agency Away orders, which are available for Nasdaq-listed securities, are 

designated by the entering party as eligible for execution at a price inferior to the 

then-current national best bid/offer.  

 

•

 

Principal Inside Only orders are designated by the party as only eligible for 

execution at a price equal or better than the then-current national best bid/offer. 

 

•

 

Brut Cross orders are displayed in Brut and executable against marketable contra-

side orders in any market center, including the Brut ECN, at the time of receipt.  

If equally-priced executable orders are available both in Brut and another market 

center, the order will first execute against Brut ECN orders; otherwise, it will be 

routed to other market centers.  Once a Brut Cross Order is routed out in whole or 

in part to another market center, any remaining unexecuted or returned portion of 

the order will be posted in the Brut ECN and will no longer be routed out for 

potential execution, unless the order is designated as an Aggressive Cross Order 

or Super Aggressive Cross Order. 

 

•

 

Directed Cross orders are routed to a specified market center for potential 

execution after they exhaust available liquidity in the Brut ECN. 

 

•

 

Aggressive Cross orders are Brut Cross orders that if, after being posted in the 

Brut ECN and exhausting available liquidity in the Brut ECN, have their price 

 

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