FAQ

What is Direct Edge ECN?

Direct Edge represents the next generation of displayed financial markets. Our dual trading platforms and integration with dark liquidity provides you with greater flexibility to optimize trading for cost, speed, trading partner, market impact, or virtually anything else you choose. Our innovative business model creates opportunities for the trading community unlike any other market center. This is what the future of trading looks like.

Everybody Needs Some Edge^SM. Do You Have Yours?

Is Direct Edge ECN independent from Knight Capital Group?

Yes. Direct Edge is an independent broker-dealer owned by a consortium of three firms: Knight Capital Group, Inc., Citadel Derivatives Group, LLC, and The Goldman Sachs Group, Inc. While Knight Capital Group was originally the sole owner of Direct Edge, the Citadel and Goldman investments (which occurred in the third quarter of 2007) diluted Knight to minority owners. As part of this process, Direct Edge has built:

An independent management team, led by CEO William O'Brien
Dedicated technology and operations personnel who are responsible for maintaining Direct Edge ECN systems and subscriber service
Its own Sales, Compliance, Marketing, Legal, and Finance functions.

Combined with its significant recent growth and growing brand presence in the marketplace, Direct Edge has evolved into an independent major market center.

What about the ISE?

On August 22, 2008, Direct Edge announced a partnership with the International Securities Exchange (ISE) in which the ISE would become a strategic investor in Direct Edge, and Direct Edge would take operational control of the ISE Stock Exchange. Click here for further information.

What kind of firms can trade on Direct Edge ECN?

Direct Edge ECN offers its services to SRO registered broker-dealers in good standing located in the United States. Institutional clients seeking to access Direct Edge ECN may do so through their broker-dealers. If you are interested in sponsored access, please call our Sales Team at 866-472-5267

Why should I trade with Direct Edge ECN?

Direct Edge is a major market center. With average daily volumes over 900 million shares (Q3, 2008), you need to have access to Direct Edge to trade successfully in today's marketplace. The greatest value, however, is in optimizing your usage of Direct Edge to get the most out of your order flow and capital. Whether your flow is cost-sensitive, speed-sensitive, fill-sensitive, or looking to interact with unsophisticated order flow, Direct Edge has a product that can help you achieve your trading objectives.

One distinction Direct Edge has is its dual platform model. Each platform has its own MPID and its own pricing schedule. EDGX offers the classic rebate pricing model, giving liquidity suppliers hjgh rebates. EDGA is a free/free model—it is free to take liquidity and free to supply it. Click here for our fee schedule.

Among our innovative products and services is our Enhanced Liquidity Provider (“ELP”) Program. It can offer you the opportunity for price and size improvement on your orders.

What is the ELP Program and how can it get me improved price and size?

Direct Edge’s pioneering ELP Program offers subscribers integrated access to multiple sources of displayed and dark liquidity. Historically, traders had to seek executions in either the displayed market or a single “dark pool.” Direct Edge was the first displayed market center to offer a comprehensive solution. By facilitating dark liquidity participation in its market, and giving subscribers access to a vast network of non-traditional liquidity, the ELP Program improves the Direct Edge trading environment by increasing a subscriber’s opportunity for price and size improvement and lowering potential market impact.

Direct Edge launched the ELP Program in the spring of 2006, years ahead of its competition, and now routinely executes ELP volume of over 88 million shares per day (Q3, 2008). The ELP Program has helped Direct Edge establish itself as a recognized leader and innovator in offering next-generation trading solutions.

Click here for details on the ELP Program works and how you can become an ELP.

Who uses EDGX and who uses EDGA?

While any subscriber can use either platform, depending upon the order, there are certain kinds of firms that use one platform over the other because of the kind of trading they do. Here is the kind of order flow each platform tends to attract:

EDGX

Passive black boxes
Retail limit orders
Agency Flow
Agency Algo Flow

EDGA

Pro-active black boxes
Retail Market Orders
Stat Arb Flow
Active Agency Algo Flow

How do I become a client of Direct Edge ECN?

To start the process of becoming a Direct Edge ECN client, please complete the request for a client agreement. Once received, Sales will contact you with a copy of our subscriber application and to discuss setting up your account.

Forms and Requirements
The client agreement includes several forms and requirements:

Your two (2) most recent annual audited financial statements;
Your two (2) most recent FOCUS reports;
A guarantee letter from your clearing firm if you have less than $1 million in net capital on your most recent FOCUS report;
A completed subscriber application; and
Completed clearing arrangement documentation

After we have received and approved the required documentation, Client Service will contact you within two business days to establish connectivity.

What stocks are traded on Direct Edge ECN?

The Direct Edge ECN currently trades in all Tape A, Tape B, and Tape C securities.

What types of orders does Direct Edge ECN accept?

Direct Edge ECN accepts Market, Limit, Immediate or Cancel, Reserve and Extended Hour Orders. These orders can be executed at the limit price or better. These orders are executed on a price-time priority.

How do I submit, cancel and receive orders and receive execution quality reports?

Before you can submit orders directly to Direct Edge ECN, you must become a client, which requires that you complete the required forms and provide the related attachments.

We have a number of choices for our clients to use to submit orders. Clients are able to submit orders to Direct Edge ECN through the Direct Edge Portal^sm. The Direct Edge Portal^sm is an application interface that allows clients to integrate their order management and trading systems via the FIX protocol with Direct Edge ECN. The Direct Edge Portal^sm allows broker-dealer clients to establish FIX sessions with the Direct Edge ECN for the purposes of submitting or cancelling orders and receiving execution acknowledgement on executions in the Direct Edge ECN order book.

Where are my orders displayed?

Nearly all orders are displayed on the National Stock Exchange (NSX). Some orders are displayed on FINRA’s Alternative Display Facility (ADF). For a list of symbols displayed on the ADF, please click here. Note: we will be shifting our displayed quotes from the NSX to the ISE soon.

How can I view the Direct Edge ECN order book?

SCRATCH allows broker-dealer clients to view the Direct Edge ECN full depth-of-book in a particular security.

SCRATCH is an optional service exclusively for Direct Edge ECN clients.

How much does it cost to trade with Direct Edge ECN?

Please see our Fee Schedule

What is the plan to address contingency events?

Please see our Business Continuity Plan

What are the hours of operation?

Clients will be able to enter orders from 8:00 a.m. to 5:00 p.m. ET.

During this time, Client Service will be available to assist you in answering your inquiries and address any trading, technological or other matters.

How do I contact the Direct Edge ECN?

Client Service and Operations
For more information about client service and operations,
contact David D'Amico, 201.942.8225 or ddamico@directedge.com.

Sales
For more information about sales,
contact our sales team, 866.472.5267 or ecnsales@directedge.com