Advanced Liquidity Providers

An AdLP, as a voluntary Market Maker, will be required to provide liquidity by placing comparable competitive bid and/or ask orders on their own account, which respect a maximum spread and minimum countervalue. As the AdLP scheme is voluntary, there may be unlimited AdLPs per instrument. An entity can freely apply to be an AdLP for any instrument.

 

Benefits to being an ADLP

AdLPs will receive a 100% discount on their passive executed orders, provided that on the instrument(s) they are registered as an AdLP, they: i) achieve a 20% share of trading (calculated as AdLPs turnover as a percentage of the total turnover for the instrument, multiplied by 2) and ii) respect quoting obligations set by Borsa Italiana.

AdLPs will also receive tps free of charge if they support more than 50 instruments as an AdLP.

1 - 50 products supported as an ADLP = 0 tps

51 - 250 products supported as an ADLP = 50 tps

251 - 500 products supported as an ADLP = 100 tps

501 -750 products supported as an ADLP = 200 tps

750+ products supported as an ADLP = 300 tps  

An AdLP will see the discounted trades in their monthly bill.

 

Requirements

No requirements. An entity must only sign the agreement with Borsa Italiana, which is managed through Member Portal. An AdLP can voluntary apply to support the liquidity of any instrument.

 

Obligations

AdLP obligations are defined by Borsa Italiana.

  • Obligation to display bid and ask prices continuously.

    The AdLP shall comply with the obligation to enter simultaneous buy and sell orders for comparable quantities.

  • Obligation to display a minimum size.

    The AdLP must comply with the obligation to display a minimum size of €10,000 for all instruments in which they support as an AdLP.

    During stressed market conditions, the size is reduced by half.

  • Maximum spread obligation.

    The AdLP must comply with the same maximum spread obligation that is set for the Specialist for the instrument(s) they support as an AdLP. Specialist’s spread can be found on our website, here.
     
    During stressed market conditions, the spread is doubled.

  • Comparability obligation.

    The AdLP must make sure that the total bid size orders does not diverge more than 50% against the total ask size orders, according to the following formula:  

    Max (Total Buy Quantity, Total Sell Quantity) = Max
    Min (Total Buy Quantity, Total Sell Quantity) = Min
    If ( Min < ( Max / 2 )) Then test has failed

AdLPs are required to adhere to their obligations for 55% of each trading day. The assessment will be calculated and disseminated on a monthly basis.

The daily compliance rate will be calculated in terms of four separate components:

  • Presence
  • Size
  • Spread
  • Comparability check

 

IT set up

Orders entered to fulfil the AdLP quoting obligations must be “Anonymous Quotes and Single Orders” or “Single Orders”. “Anonymous Quotes” allow the AdLP to contextually submit bid and ask orders, whilst also identifying that they are from an AdLP.

A new AdLP must test the “anonymous quote”, should they wish to use this functionality, before starting the activity.

AdLPs are given the option of two dedicated interfaces for the relevant instruments:

CompID “D” for those AdLPs that wish to submit both orders and anonymous quotes

CompID “F” for those AdLPs that wish to submit orders only

An AdLP must decide which interface they wish to use when signing the agreement to be an AdLP. The AdLP activity should be covered using only one naming convention (CompID “D” or CompID “F”), but the member can set up more CompID’s of the same type.

The “D” or “F” CompID may be used for AdLP activity only and only for those instruments which the entity supports as an AdLP.  

 

How to become an AdLP

The agreement to become an AdLP is signed through Member Portal. When signing the agreement you will be able to select the instruments that you would like to support as an AdLP and which interface.

 

Resignation of status

The discontinuation of the activity of an AdLP must be communicated to Borsa Italiana and the resignation of status as an AdLP is managed through Member Portal. The resignation shall entry in force from the date specified by Borsa Italiana in agreement with the AdLP.

Please find below the list of ADLPs on the ETFplus market:

https://memberportal.borsaitaliana.it/web/borsa/report/-/report-url/download-adlp-etfplus


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