The Nasdaq Stock Market recently filed a proposal with the Securities and Exchange Commission to allow market makers to boost liquidity in certain securities, including exchange traded funds.
The program would allow sponsors of thinly traded ETFs to pay market makers to bolster liquidity in their products and make them cheaper for investors to trade, Ignites.com reported Thursday.
It would benefit traders and investors by encouraging more quote competition, narrower spreads and greater liquidity, according to the Nasdaq filing.
“In this program, an ETF sponsor would pay an annual fee of $50,000 to $100,000 per ETF to Nasdaq,” Ignites reported. “The fee, which would be in addition to the traditional listing fees, would be passed on to market makers in the form of a rebate in exchange for improving trade and quote performance. Any fees not paid out to market makers would go back to the ETF sponsor.”
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