The Midpoint Extended Life Order (M-ELO): A Story of Continued Growth and Record Volumes
A year and a half after launch, the Midpoint Extended Life Order (M-ELO) continues to show positive momentum with multiple record volume days of over 25 million shares. When Nasdaq introduced M-ELO, our goal was to create a simple solution that democratizes speed; but what we did not know was how much it would harmonize performance amongst our customers. 18 months later, we measured the results: M-ELO and its half-second delay have exceeded expectations by providing consistent performance.
The graphic below shows that performance is near parity with customers. The vast majority have markouts +/- half a basis point using multiple time horizons from 100ms to 1 minute. We have also seen strong results when looking at the single time snapshot 1-second post M-ELO execution. We are extremely proud of the overall growth of M-ELO’s volume and customer base.
M-ELO continues to outperform both displayed and dark venues. When analyzing how the market responds to midpoint executions, the graphic below illustrates that M-ELO executions have the lowest movement post-trade based on changes in the NBBO after an execution.
Odd Lot Size Orders
As M-ELO continues to become the standard in purpose-built solutions, Nasdaq has implemented new optional features to provide additional liquidity that adhere to M-ELO’s commitment to bring like-minded investors with longer time horizons together. In August, Nasdaq enhanced M-ELO by allowing odd-lot sized orders to be entered and executed. As the dollar value of stocks continues to increase and the number of stock splits decreases, many higher-priced stocks execute a significant portion of their volume in odd lots. To accommodate this trend, orders for less than one round lot are now accepted for M-ELO. As always, the minimum quantity feature is available for those who wish to opt-out of executing with odd lots or smaller-sized orders.
An Opportunity for More Interaction
In September, we introduced the option for M-ELO orders to trade with qualified midpoint orders on the continuous book. To qualify, resting midpoint orders must opt in to trade with M-ELO orders and must rest on the book for at least a ½ second. M-ELO users may opt-in if they wish to trade against eligible midpoint orders. The option to interact with these M-ELO-like orders will result in increased fill rates, without sacrificing the original intention of M-ELO.
To learn more about M-ELO and how you can leverage it, visit our M-ELO product page or contact sales@nasdaq.com.
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