Providing Liquidity And Stability Through Experience, Technology And Innovation
Liquidity is a vital contributor to investor confidence and issuer success. At the Aequitas NEO Exchange, we believe that while high frequency trading is generally beneficial to marketplaces, for such practices to be considered market making there must to be an obligation to provide liquidity throughout the entirety of the trading day, not only when it is financially beneficial to do so.
A DMM leverages its experience, technology and innovation to provide liquidity to all securities trading on the Aequitas NEO Exchange, i.e., our listed securities as well as TSX and TSX Venture listed securities.
All DMMs must be IIROC members and must trade for their own account to assist in the maintenance of a fair and orderly market and to achieve reasonable price continuity and liquidity for assigned securities in both the Lit Book and the NEO Book™.
Obligations include two-sided continuous quoting with size and spread requirements over a proportionate assignment of liquid and illiquid securities, in order to ensure there is a liquidity safety net for those securities that need it the most. For Aequitas NEO Exchange listed securities, the DMM is also responsible for facilitating the opening, delayed opening and resumption of trading following a halt.
To balance their obligations DMMs are provided with the Market Maker Volume Allocation benefit for their assigned securities. This guarantees that a DMM is able to participate in trading without having to compete on speed, by giving visible orders it has in the books priority up to a specified percentage of daily traded volume per book and security, which is initially set at 15%. This allocation is executed without order fragmentation.
As an additional benefit, DMMs can also partake in our Performance Bonus Program (PBP), which is a monetary incentive for those DMMs that outperform relative to other DMMs.
Transparency is key to the success of the DMM program. Participants are continually monitored to ensure they adhere to our code of conduct. DMMs’ performance metrics are publicly available and can be accessed on our website here.