Nadex plans to allow Market Makers to submit Post-Only Quotes only

Maria Nikolova

As of July 26, 2017, Market Makers may only submit Post-Only Quotes to Nadex. They will still be temporarily relieved of their quoting obligations when 90% of the applicable position limit has been met.

North American Derivatives Exchange, Inc. (Nadex), a part of IG Group Holdings plc (LON:IGG), is planning another amendment to its rules, this time, concerning Rule 4.4 – Obligations of Market Makers.

According to a submission to the Commodity Futures Trading Commission (CFTC) on July 12, 2017, Nadex aims to amend Rule 4.4. (b) (iii). After the amendment, the rule states that:

“All Market Maker quotations shall be submitted as “Post-Only Quotes”. A Market Maker is not permitted to submit Non Post-Only Orders.”

Before the amendment, the rule stated:

“All Market Maker quotations in the Designated Classes to which the Market Maker is appointed shall be submitted as “Post-Only Quotes”. A Market Maker may submit Non- Post-Only Orders in markets to which the Market Maker has not been appointed and, provided the Market Maker continues to meet its obligations to continuously quote a two-sided market under the Market Maker Agreement and these Rules, in the Designated Classes to which the Market Maker is appointed.”

Nadex notes that Market Makers will continue to be temporarily relieved of their quoting obligations when 90% of the applicable position limit has been met.

The changes are set to come into effect on July 26, 2017.

Nadex has been seeking to amend its rules lately in order to prevent a risk of harm to the Exchange, the market and the participants. In late June, it announced proposed amendments to Rule 5.5, and the part concerning entry of orders, in particular. Under the proposals, an order rate limiter functionality will cap the maximum number of orders submitted to Nadex per a given period.

Also in June, FinanceFeeds reported of other changes on the table for Nadex as it sought to tackle malignant activities. Nadex said back then it plans to amend its Rule concerning Prohibited Transactions and Activities in order to prohibit the intentional or reckless disregard for the orderly execution of transactions during the closing period.

In April, Nadex outlined amendments to its Rulebook that would allow it to limit trading privileges in cases where, although no Rule violation that could lead to disciplinary action may have occurred, Nadex has deemed the limitation is necessary to minimize risk and protect the Exchange, the market, and/or its Members. These restrictions would apply to cases where an individual makes verbal or written threats to Nadex and/or its staff, an individual sends an excessive number of emails or makes an excessive number of phone calls to Nadex; an individual makes an artificially high number of minimal deposits or withdrawals during the trading day, etc.

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