FIA PTG submitted a second round of comments to the SEC in response to the Nasdaq Extended Life Priority Order Attribute (ELO).
In the first round of comments, FIA PTG raised concerns with the introduction of increased complexity and associated costs to the U.S. equity markets, inequitable discrimination among market participants, and lack of clarity around certain material provisions. FIA PTG expressed appreciation for Nasdaq's response to initial concerns--particularly shortening the review period from quarterly to monthly, giving additional detail as to how the qualification requirements will operate and planning to develop new surveillance tools to detect potential misuse of the order attribute. However, FIA PTG remains concerned about the retail definition and potential for “gaming” the system and continues to believe the ELO will negatively impact price discovery.
As in every comment letter on latency mechanisms (including the speedbumps proposed by IEX, CHX and NYSE MKT), FIA PTG urged the SEC to address the fundamental complexity in market structure instead of taking a piecemeal approach reactive to individual exchange proposals.