The NYSE Arca Lead Market Maker (“LMM”) program is a unique market model that seeks to provide superior market quality for primarily listed ETPs (Exchange Traded Products) on NYSE Arca. The LMM has clearly defined quoting obligations that must be met on an ongoing basis. In addition to Market Maker Quoting Obligations, such as maintaining continuous two-sided quotes, LMMs must meet minimum performance requirements across a wide array of statistical metrics for each primarily listed ETP.
Those requirements include:
- a percentage of the time that the LMM quotes are at the national best bid and offer (“NBBO”)
- an average displayed size
- an average quoted spread and participation in the opening and closing auction
In return for taking on enhanced quoting obligations, LMM are compensated with economic incentives and with lower transaction pricing that is reserved for the LMM.