On top of a market making agreement, investment firms can also sign a market making scheme on a voluntary basis

• Similar to the previous Liquidity Provider Agreement
• You can access self-trade prevention
• Market maker chooses the ETFs he’s interested in quoting and send his orders with the corresponding flag : Account code 6 on Euronext Cash Markets, combined with Algorithm flagged for the MiFID II field ExecutionWithinFirmShortCode
• Includes fee incentives and connectivity discount
  • Main principles are :
    • The regular fees to trade ETFs is 0.6bps with a min fee of €0.75
    • To these fees, Euronext will apply a % discount (on a monthly basis, when obligations are fulfilled)
    • Based on the LP Market Share (numerator: your volumes [single counted] / denominator: Euronext volumes [double counted]) and depending on the maker and taker activity:
      • Maker discount = 4 x passive market share (capped at 100%)
      • Taker discount = 1 x aggressive market share (no cap)
      • No discount on auction activity.
• Commitment :
  • Will have to fulfil the conditions for the Market Making Agreement, but Euronext will be slightly more demanding on the presence time as we offer fee rebates:
  • Commitments:
    • Must be fulfilled at least 80% of the time*:
      • Provide liquidity continuously in the chosen financial instrument(s)
      • Post firm, simultaneous two-way quotes**.
      • Provide a €100,000 min size on bid and ask orders with comparable size (max 50% difference between bid and ask)
      • Providing competitive price within the maximum bid-ask range, i.e.:
        • Standard exposure European Equity ETF: 2% maximum spread***
        • Standard exposure Government Bond ETF: 2% maximum spread***
        • All Other ETFs : 3% maximum spread***
• Reporting: Euronext will report to regulators any market making activity. There is so far no “punishment” system set up, only the fee benefit that are performance-based. 
• You will receive a daily ETF market data report and you appear in the ETF issuers daily statistics report:

• Conclusion:

• You send orders on an ETF ABC more than 50% of the time BUT do not respect the rules in terms of spread and size : You don’t have to do anything
• You send orders on an ETF ABC more than 50% of the time AND you do respect the rules in terms of spread & size : You complete the Market Making Agreement but get no access to fee rebate.
• You extend your presence time, size and spread commitment to 80% of the time : You complete the Market Making Agreement AND Market Making Scheme :  you access fee rebate as well as visibility toward issuers

For more information on ETF liquidity providers and market makers:

www.euronext.com/fr/membership/liquidity-providers-and-market-makers