FIA PTG responds to Nasdaq Cabinet Proximity Option Program Proposals

30 April 2024

In a letter filed with the Securities and Exchange Commission (SEC) today, the FIA Principal Traders Group (FIA PTG) urged the SEC to disapprove Nasdaq’s proposed rule changes to Expand the Cabinet Proximity Option Program and to Establish a Reservation Fee.  FIA PTG raised three principal concerns with respect to the Proposed Rule Changes all in connection with Nasdaq’s existing data center facilities in Carteret, NJ (NY11) and Nasdaq’s new facility under construction just to the north of NY11 (NY11-4):

  • The introduction of NY11-4 as currently contemplated may create impediments which result in an “imperfect mechanism” for trading.
  • Nasdaq has failed to provide clear information and assurances with respect to equal access.
  • Nasdaq’s lack of transparency will effectively compel latency-sensitive market participants to purchase and build-out cabinets in NY11-4, which will be costly, burdensome, duplicative and potentially disruptive to market making activities.

FIA PTG urged the SEC not to approve the proposed rule changes until such time as Nasdaq provides the necessary clarity through an enhanced rule filing subject to public review and comment, as to how connectivity and the related latencies in both data centers comply with the SEC’s rules and advance the SEC’s objective of promoting just and equitable principles of trade and removing impediments to, and perfecting the mechanism of, a free and open market and a national market system.

Read the full letter here.

  • PTG
  • Equity Market Structure