Designated Liquidity Providers

The centerpiece of The NASDAQ ETF Market is the Designated Liquidity Provider, a Market Maker who has been selected to maintain liquidity in qualified ETFs (i.e., Qualified Securities).

The ETF Market requires Designated Liquidity Providers to maintain a higher standard of market quality measured by spread, depth, and time quoting at or near the National Best Bid and Offer (NBBO). They receive price incentives to support ETFs during their period of initial listing, when ETFs need to develop more active trading. This rebate program is available only during the incubation period of the ETF. Once the ETF reaches an average daily volume of 10,000,000 shares for two out of three months, regular NASDAQ-listing pricing will apply.

Designated Liquidity Providers are selected through a consultative process between ETF sponsors, market-making firms and NASDAQ OMX.