The introduction of Super Montage will be the next major change in the NASDAQ architecture. Super Montage will replace the NASDAQ Level II and III screens with a dual-mode display. On the top of the screen, Super Montage will anonymously display the aggregate size and three-tier depth of a quote. Priority in execution of limit orders will be determined based on displayed interest, not on reserve interest. Only at the time of execution will market makers' identification be displayed, not before. On the bottom of the screen, Super Montage's display will allow market makers and ECNs to line up their orders and interest as they did on Levels II and III.
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Super Montage was created with the objective of providing greater transparency by rewarding liquidity. For example, if you want to buy 5,000 shares and you are willing to bid for them out loud at the most competitive price, you will be able to buy the shares before another trader who wants to buy the same amount but is only wiling to show 1,000 shares. Super Montage will provide reserve size accessibility at all levels, which will allow market makers and traders to display a limited amount while keeping a larger size in reserve.
With accessibility to Super Montage in mind, NASDAQ is currently making modifications to the antiquated SOES and Select Net execution mediums. The modifications will reduce the current dual liability of market makers to SOES and Select Net by routing both mediums through one pipeline. This will increase the speed with which you can access Super Montage by reducing message traffic. Also, negotiating for executions will be automatic, so traders who enter orders will know immediately whether their orders were executed. The market maker receiving the order will be forced to either execute or move immediately. This will eliminate the frustrating time delay that is currently permitted to give market makers a window to decide whether or not to execute.
NASDAQ will also implement the decimalization of quotes by the fourth quarter of 2000. Quotes will appear on NASDAQ in nickel increments, as they do now on NYSE. Executions will be possible in penny increments. This change will act to further narrow spreads, benefiting customers.
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