Nasdaq has announced that it has received approval from the SEC to launch Dynamic Midpoint Extended Life Order (M-ELO), the first exchange Artificial Intelligence (AI) powered order type. M-ELO matches like-minded counterparties with longer-term investing horizons by requiring each party to a trade to wait a short period of time before trading. The order type applies an AI model with over 140 factors and offers an average combined volume-weighted improvement of over 30% in testing.
The traditional M-ELO order type was originally designed with a static holding period set to common market conditions. However, Nasdaq found that high-quality executions and protection against adverse selection are improved by dynamically adjusting the holding period to real-time market conditions. Based on this research, Nasdaq developed Dynamic M-ELO, the first real-time AI order type, which has shown a 20.3% increase in fill rates and an 11.4% reduction in mark-outs.
Dynamic M-ELO not only enhances liquidity but also improves execution quality. The order type intelligently adapts to real-time market conditions, improving overall execution quality and fill rates. Nasdaq’s commitment to driving innovation in a responsible manner is evident in the development of Dynamic M-ELO.
In addition to the AI powered order type, Nasdaq has also implemented predictive AI in its US options markets. The Strike Price Optimization Program uses predictive AI to estimate the potential demand for strike listings, improving overall efficiency and operational efficiency. The program streamlines the process of determining new listings, reducing the human power needed for daily analysis.
Nasdaq’s dedication to leveraging new technology, including AI, to improve price discovery and market efficiency is apparent. The company continues to provide innovative solutions and products that benefit all market participants. Nasdaq’s Dynamic M-ELO is a testament to their commitment to cultivating the quality of markets and delivering optimal outcomes to market participants.
Sources:
– Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change to Amend Rules 4702(b)(14) and (b)(15) Concerning Dynamic M-ELO Holding Periods
– Nasdaq website (link:
Nasdaq has announced that it has received approval from the SEC to launch Dynamic Midpoint Extended Life Order (M-ELO), the first exchange Artificial Intelligence (AI) powered order type. M-ELO matches like-minded counterparties with longer-term investing horizons by requiring each party to a trade to wait a short period of time before trading. The order type applies an AI model with over 140 factors and offers an average combined volume-weighted improvement of over 30% in testing.
The traditional M-ELO order type was originally designed with a static holding period set to common market conditions. However, Nasdaq found that high-quality executions and protection against adverse selection are improved by dynamically adjusting the holding period to real-time market conditions. Based on this research, Nasdaq developed Dynamic M-ELO, the first real-time AI order type, which has shown a 20.3% increase in fill rates and an 11.4% reduction in mark-outs.
Dynamic M-ELO not only enhances liquidity but also improves execution quality. The order type intelligently adapts to real-time market conditions, improving overall execution quality and fill rates. Nasdaq’s commitment to driving innovation in a responsible manner is evident in the development of Dynamic M-ELO.
In addition to the AI powered order type, Nasdaq has also implemented predictive AI in its US options markets. The Strike Price Optimization Program uses predictive AI to estimate the potential demand for strike listings, improving overall efficiency and operational efficiency. The program streamlines the process of determining new listings, reducing the human power needed for daily analysis.
Nasdaq’s dedication to leveraging new technology, including AI, to improve price discovery and market efficiency is apparent. The company continues to provide innovative solutions and products that benefit all market participants. Nasdaq’s Dynamic M-ELO is a testament to their commitment to cultivating the quality of markets and delivering optimal outcomes to market participants.
Sources:
– Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change to Amend Rules 4702(b)(14) and (b)(15) Concerning Dynamic M-ELO Holding Periods
– Nasdaq website