Buy-Side : Reg NMS

What is Reg NMS?

Reg NMS (National Market System) is a regulation created to increase transparency and fairness in the execution of equities trades. It is aimed at U.S. market centers that display their quotes - typically exchanges and ECNs – and it went into full effect on October 8, 2007. Specifically, it holds market centers responsible for ensuring all of the orders they receive are matched at the National Best Bid or Offer price (NBBO) across all of the displayed markets. That means the venues need to monitor all displayed prices, and in the event a different market has a better price for an order, the venue is obligated to redirect the order to the destination with the superior price. This outbound routing process adds time and expense to trade execution.

Reg NMS has given rise to market center automation, liquidity fragmentation and consolidation, and a long series of market restructuring events that continue today.

How are hedge funds and asset managers responding?

Many hedge funds and asset managers are choosing to route orders according to the guidelines of the Order Protection Rule up front, to maximize speed, to maximize anonymity, and to minimize execution costs. This routing is typically combined with execution services from an agency broker dealer.

Selero Smart Order Routing and Best Execution Technology

Selero Smart Order Routing and Best Execution Technology (SORBET) provides traders with a variety of Reg NMS-compliant execution strategies to choose from, and it allows them to use those strategies as building blocks to create adaptive, hybrid, flows. In addition, it gives traders control over configurable parameters to drive individual strategies and to control automated hybrid processes. Finally, it allows them to change strategies, parameters, and triggers at any time, to reflect changes in their execution priorities and changes in market conditions.

Agency brokerage

Selero can provide agency brokerage services through its broker dealer, Nunami Services, LLC, Member FINRA, www.nunami.net.

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