By registering as a Primex Auction System market makers (PAMM), a participant is entitled, but not obligated to place match parameters or execution guarantees on the customer orders that they expose to the Primex Auction System. To qualify as a PAMM, a market maker must be willing to commit a significant portion of its retail-sized order flow (1,099 shares and under) to the system in the securities for which the participant is registered as a PAMM. For more details, see the Primex Auction System FAQ posted at http://www.primextrading.com/essentials/faq/.
Match parameters and execution guarantees provide PAMMs with a balanced level of control over their order flow, allowing them to commit capital and provide executions to their customer orders in conjunction with the exposure process. This enables PAMMs to utilize the system's auction process to facilitate best execution for their customer orders without them having to abandon current business models and relationships.
A PAMM must establish its match parameter or its execution guarantees at the time of order entry. When the system exposes an order that includes either a match parameter or execution guarantees, these conditions are not communicated to crowd participants.
Match Parameters When a PAMM enters a customer order with a match parameter, the PAMM effectively guarantees that entire order's execution at the NBBO. The system then exposes the order to the electronic crowd to seek opportunities for price improvement beyond the NBBO. Crowd participants always have opportunities to interact with orders that include a match parameter.
There are two types of match parameters:
50 Percent (50%)
Block Facilitator.
PAMMs can also use the system's "Clean Cross" functionality to validate the price of large crossing orders between two customers.
PAMMs may select only one match parameter per customer order.
Execution Guarantees If a PAMM does not wish to guarantee an entire order's execution, that PAMM may still specify a minimum execution guarantee for that order. Execution guarantees are always provided in addition to any crowd interest that may exist and only after the crowd has had an opportunity to interact with the entire order.
Execution guarantees will be imposed at a price equal to the prevailing NBBO at the end of the exposure period.
