On March 6, the NASDAQ Stock Market LLC filed with the Securities and Exchange Commission proposed rule changes to update and codify the requirements applicable to Nasdaq members that provide sponsored access to other firms and customers to the Nasdaq execution system. Nasdaq proposes to create a new order type, the Directed Order, for use by its members in compliance with their obligations under Regulation NMS.
Directed Orders would allow Nasdaq participants to grant access to customers and other brokers to place orders without checking the Nasdaq book that would go directly to another market place for execution. If a Directed Order was not executed it would be returned to the Nasdaq participant. Directed Orders may be designated as “intermarket sweep orders.” A broker-dealer that designates an order as an intermarket sweep order has the responsibility of complying with Rules 610 and 611 of Regulation NMS, i.e. it is a limit order that may sweep all protected bids or asks on all markets at the one price designated in the order.