Trading on NEO
Leveling the Playing Field.
Two Types of Traders
We see two distinct types of traders operating in the markets today, and we classify them based on their trading profile.
Latency-sensitive, high-frequency traders are those who trade for their own account using sophisticated technology and automated, co-located trading strategies. Their orders are not based on long-term investment strategies.
Traders who work on behalf of long-term investors, buying or selling securities based on their perceived value. We refer to these as NEO Traders, and their classification includes all institutional and retail client flow.
The NEO Exchange consists of three distinct venues aimed at levelling the playing field for the long-term investor.
NEO-L encourages liquidity and levels the playing field for long-term investors by:
- Giving NEO Trader orders priority over high-frequency traders, regardless of which orders hit the market first.
- Combining a make-take fee model with NEO Trader priority to provide an attractive financial rebate while reducing the time to trade.
NEO-N encourages liquidity and levels the playing field for long-term investors by:
- Giving priority to larger long-term investor trades over smaller, fleeting orders through a unique size-time order matching priority.
- Imposing a technical “speed bump” – a randomized 3-9 millisecond delay applied only to orders from high-frequency traders actively looking to take liquidity out of the market.
- Displaying volume aggregated by price (market-by-price), creating additional pre-trade anonymity to liquidity providers looking to post sizeable orders.
NEO-D creates a truly differentiated dark marketplace that offers options for all types of traders, while continuing to provide an enhanced trading experience for long-term investors by:
- Allowing all participants to submit active orders and, subject to the Counterparty Election specified on the passive orders, orders from all accounts may interact with each other.
- Continuing to give NEO Trader orders priority over high-frequency traders, regardless of which orders hit the market first.
- Including NEO-D market data in the existing NITCH feed at no extra cost.
Learn more about the benefits of NEO-D, view the product sheet.
The Results Are In!
As a result of our unique structure, long-term investors trading on NEO are reaping the benefits of a more level playing field. Time to trade has been consistently shortened, quote fading is virtually non-existent, and unnecessary intermediation has been reduced – with a far greater percentage of trades taking place between long-term investors.