NASDAQ OMX Nordic intends to launch Sold-Out Buy-Back (SOBB) functionality for Warrants, Certificates and Exchange Traded Notes (ETN). The functionality will be available on NASDAQ OMX Copenhagen, Helsinki and Stockholm. Sold-Out Buy-Back will be used in production from September 22, 2014 and it will be available for testing in INET OTF and GCF4 as of August 18, 2014.
The functionality is optional for issuers and can be used in exceptional circumstances where the Market Maker has run out of issued volume. However, as the Sold-Out Buy-Back will impact other participants’ ability to send in orders, all participants active in the Warrants, Certificates and Exchange Traded Notes segments should evaluate the impact on their systems.
To make use of the SOBB, the Market Maker will contact NASDAQ OMX Nordic and request for the order book impacted to be placed in Sold-Out Buy-Back. NASDAQ OMX Nordic will initiate the Sold-Out Buy-Back with the sending of a Note Code and will flush the order book.
After the Note Code is applied, the Market Maker will only be able to send in buy orders. Under the Sold-Out Buy-Back, other participants will only be allowed to send in sell orders until the SOBB is terminated. During the SOBB, irrespective of the Time-In-Force, all sell orders are treated as Immediate-or-cancel (IOC). Any buy orders that are not sent in by the Market Maker during the Sold-Out Buy-Back will be rejected.
Once the Market Maker is satisfied with its inventory, they will contact NASDAQ OMX Nordic. The Note Code will be removed from the order book and the order book will be flushed. After the SOBB is lifted, trading will resume normally and according to the trading phase ongoing at that time.
The start of the Sold-Out Buy-Back is indicated by the dissemination of the note code for the impacted order book through the “Order Book Directory” message in ITCH.
The end of the Sold-Out Buy-Back and the removal of the Note Code leads to ITCH relaying an “Order Book Directory” message with an updated Note Code field for the order book.
INET identifiers:
Market segments impacted by the Sold-Out Buy-Back
| Exchange / MIC | Segment name | Segment symbol | Currency | Seq. no | GCF ID |
| XCPH | OMX CPH Warrants | DKWA WAR | DKK | 167 | 308 |
| XCPH | OMX CPH Certificates | DKWA CERT | DKK | 168 | 310 |
| XCPH | OMX CPH Exchange Traded Notes | DKEQ COM | DKK | 357 | 458 |
| XSTO | OMX STO Warrants | SEEQ WAR | SEK | 4 | 21 |
| XSTO | OMX STO Certificates | SEEQ CERT | SEK | 160 | 256 |
| XSTO | OMX STO Exchange Traded Notes | SEEQ COM | SEK | 158 | 264 |
| XHEL | OMX HEL Covered Warrants | FIEQ WAR | HEL | 64 | 93 |
| XHEL | OMX HEL Certificates | FIEQ CERT | HEL | 159 | 258 |
| XHEL | OMX HEL Exchange Traded Notes | FIEQ COM | HEL | 157 | 456 |
Protocol changes
OUCH:
A new value is added to the Reason field of the Rejected Order Message (section 2.2.6):
- Reason = “I” - Invalid Side
The new reject Reason will be used during Sold-Out Buy-Back when:
- A client sends a buy order and;
- A market maker sends a sell order.
TotalView-ITCH:
A new value is added to the Note Codes field of the Order Book Directory message (section 4.3.1):
- 2 097 152 = “SO” - Sold-Out Buy-Back
The new Note Code will be used to indicate that a symbol is subject to Sold-Out Buy-Back rules.
GCF TIP:
In TIP, the note code is relayed through the Basic Data Tradable message BDt or intraday in the real-time Notification message NOt.
Protocol specifications
Next versions of INET protocol specifications are available at the NASDAQ OMX Technical Information website, under INET Nordic Future Protocol Specifications .
Time plan
The Sold-Out Buy-Back functionality is planned for launch: in INET
- INET Test (OTF), GCF 4 – August 18, 2014
- INET Production – September 15, 2014
- Please note that although the new node code will be implemented on September 15, it will start to be used from September 22, 2014
Issuer setup
Issuers who want to be set up to use the Sold-Out Buy-Back functionality should contact Issuer Surveillance at DL-ILASTO@nasdaqomx.com . This should be done prior to the Market Maker wanting to use the functionality for the first time. NASDAQ OMX Nordic recommends that issuers/Market Makers test the functionality prior to using it in Production.
INET Nordic Market Model
The changes will be reflected in the Market Model valid from September 22, 2014.
If you have any questions regarding this Exchange Notice, please contact NASDAQ OMX Tech Support at: +46 8 405 6410, operator@nasdaqomx.com . For Business related questions, please contact hanna.kirk@nasdaqomx.com for more information.
Best regards,
NASDAQ OMX Nordic
NASDAQ OMX Nordic is not legal entity but describes the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm and Iceland.
