9%
Increase in turnover in the months after Liquidity Provider introduced
4%
Increase in number of days with trades
Liquidity Enhancement
How to Attract New Investors
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5
How can a Liquidity Provider Program support the raising of liquidity?
As part of the Liquidity Provider Program, a trading member ("Liquidity Provider") is contracted to take on the responsibility to ensure liquidity in the company's share by supplementing the existing pool of investors and stepping into the role of the missing desired investor. The liquidity provider will provide liquidity both as a buyer and seller and in the absence of other trading interests. This activity will act as a bridge between buyers and sellers when the liquidity is not sufficient to find counterparts for every trade at every given time. It can act as an accelerator to support other activities for a company that is determined to increase its liquidity in the stock.
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As part of the Liquidity Provider Program, a trading member ("Liquidity Provider") is contracted to take on the responsibility to ensure liquidity in the company's share by supplementing the existing pool of investors and stepping into the role of the missing desired investor. The liquidity provider will provide liquidity both as a buyer and seller and in the absence of other trading interests. This activity will act as a bridge between buyers and sellers when the liquidity is not sufficient to find counterparts for every trade at every given time. It can act as an accelerator to support other activities for a company that is determined to increase its liquidity in the stock.
Other factors affecting liquidity
Share Price Level
May be influenced by stock splits or reverse stock splits
Shareholder Value
May be influenced by dividend strategy, share buybacks and spin-offs
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Previous Webinars
Liquidity Enhancement ->
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FAQs
Resource Center
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Liquidity is the degree to which a share can be quickly bought or sold in the market without significantly affecting the share price. Several indicators are used to measure the liquidity of a company's share. Three key measurements are turnover, order depth and spread. Learn more about liquidity in our factsheet.
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There are several factors influencing the liquidity of a stock and a number of activities may be undertaken to impact them. The liquidity increasing activity most suitable for a certain company depends on the company's situation.
Liquidity Factor Measure that may be taken Trade cost • Liquidity Provider Program Investor awareness • Investor Communication • Analyst coverage • Index inclusion Share price level • Stock split/Reverse stock split Shareholder value • Dividend strategy • Share buybacks • Spinoff -
The minimum requirements for a Liquidity Provider entering into a Liquidity Provider Program relate to commitments concerning presence, volume and spread. Prices must be quoted at least 85 percent of the time during continuous trading. The Liquidity Provider must quote prices corresponding to a defined minimum value, on both buy and sell sides, so that the buy and sell price do not deviate more than a certain percentage.
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To enter into a Liquidity Provider Program, the issuer and a trading member sign a Liquidity Provider agreement that stipulates the agreed terms. These terms can be stricter than the minimum terms required by Nasdaq. The Liquidity Provider then informs Nasdaq about the agreement and the issuer sends a market disclosure.