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IT information

IT – INET Nordic – Knock-Out Buy-Back and Buy-Back Note Codes for Exchange Traded Products (17/16)

Nasdaq Nordic is planning to introduce two additional note codes for Exchange Traded Products on Nasdaq Stockholm, Nasdaq Helsinki and Nasdaq Copenhagen. The note codes will be technically the same as the existing Sold-Out Buy-Back (SO) note code. When the Knock-Out Buy-Back or the Buy-Back note codes are applied, only selling back to the market maker is allowed. The specific uses of these additional note codes are detailed below and will be reflected in the Market Model.

The new note codes are planned for INET and GCF production as of April 25, 2016 and testing will be available in INET OTF and GCF- EXT4 as of March 14, 2016.

Details

Knock-Out Buy-Back

Nasdaq Nordic has a long-standing market practice for “Open bidside after Knock-Out” i.e. Knock-Out Buy-Back. Until now, no specific note code has been available for Knock-Out Buy-Back. A new note code “KB” will be added to cater for situations where the instrument is knocked-out and the issuer would like to offer buy-back for the rest of the trading day as a service for investors. The use of this functionality continues to be optional for issuers. After the note code “KB” has been applied, the Market Maker will only be able to send in buy orders. Under “KB”, other participants will only be allowed to send in sell orders until the “KB” is terminated. During the Knock-Out Buy-Back, irrespective of the Time-In-Force, all sell orders are treated as Immediate-Or-Cancel (IOC). Any buy orders that are not sent in by the Market Maker during the Sold-Out Buy-Back will be rejected.

In the interim period until the launch of the new note code “KB”, the existing “SO” note code can be used for Knock-Out Buy-Back. During this interim period, the instrument will first be placed in Trading Halt – KO before the note code “SO” will be applied.

Buy-Back  

As communicated in IT Notice (10/16), the Sold-Out Buy-Back note code has an additional use during an interim period. “SO” can be used for maturing instruments where the issuer has issued an equivalent replacement instrument. As of April 25, a new note code “BB” will be added for the specific purpose of “Buy-Back” when the instrument is not sold-out nor knocked out. Buy-Back can be used when the instrument is about to reach its maturity and the issuer has issued an equivalent replacement instrument within the same market segment. The note code “BB” will work in the same way as “KB” and “SO”.

Once the new note codes (“KB” and “BB”) are available as of April 25, the “SO” note code will return to its original use, i.e. cases where the instrument has sold-out.

The start of KB and BB is indicated by the dissemination of the note code for the impacted order book through the “Order Book Directory” message in ITCH.

INET identifiers:

Market segments where the note codes will be applicable: 

TotalView-ITCH:

Two new values are added to the Note Codes field of the Order Book Directory message (section 5.2.1):

• “KB” – Knock-Out Buy-Back
• “BB” – Buy-Back

The new Note Codes will be used to indicate that a symbol is subject to Buy-Back rules.

GCF TIP:

In TIP, the note codes are relayed though the BasicDataTradable (tag BDt) message and intraday in the real-time message Notification (tag NOt).

Protocol specifications

Current and future versions of INET protocol specifications are available at the Nasdaq Nordic Technical Information website, under INET Nordic Protocol Specifications.

Implementation schedule

Time schedule

The addition of the new “KB” and “BB” note codes is planned for:

• INET Test (OTF), GCF EXT4 – March 14, 2016
• GCF Production – April 25, 2016
• INET Production – April 25, 2016

Documentation

INET Nordic Market Model:

These changes will be reflected in the Market Model effective as of April 25, 2016. The current version of the Market Model can be viewed at http://business.nasdaq.com/list/Rules-and-Regulations/European-rules/common/index.html

Support

For technical questions, please contact Nasdaq Cash Equity Operations:
Tel: +46 8 405 6410,
E-mail: operator@nasdaq.com 

Best regards,

Nasdaq Nordic

“Nasdaq Nordic” is not a legal entity but represents the common offering by Nasdaq Copenhagen A/S, Nasdaq Helsinki Ltd, Nasdaq Iceland hf. and Nasdaq Stockholm AB.