The Competitive Liquidity Provider (CLP) program is a reward-based program designed to encourage quoting activity for BATS-listed stocks. Each ETP listing will graduate from the program after two years, or if trading reaches two million shares ADV (Average Daily Volume) across all market centers for two straight months.

Each liquidity provider must be a registered Market Maker* and register to be a CLP for the ETP. Liquidity providers may be a CLP in multiple listings.

The BATS CLP program attracts traders and institutions in two ways.

First, the program encourages initial involvement by allowing multiple registered CLPs to participate in the launch of the ETP. This makes it easier for liquidity providers to participate by allowing each of them to put up a smaller amount of seed capital, which limits their individual risk. This arrangement also promotes more liquidity from the beginning because multiple CLPs have a stake in the ETP.

The seeding CLPs will be rewarded for their participation in the launch of the ETP with an exclusive, six-month incubation period. After the incubation period has concluded, the program will be open to an unlimited number of CLPs.

Secondly, the program encourages participation post-IPO with an incentive for CLPs to provide liquidity and create tighter spreads. This is done with a BATS-sponsored, monetary reward in which CLPs compete against each other.

Each day CLPs compete for a $250 reward. The reward is given to the CLP that wins the most SETs (Size Event Tests) during the trading day. To win a SET, the CLP must have the most aggregated size at the NBBO (National Best Bid or Offer) when a random testing event is done within each second of the trading day. Only round lots will be counted toward the CLP’s quoted size. CLPs must win at least 10% of the SETs each day to qualify for the reward.

Two CLPs may receive the reward each day, with the top winner receiving 80% of the reward, and the second-place winner receiving the remaining 20%. In the event of a tie, the CLP with the most executed shares will win.

Every registered CLP that wins the daily reward at least two times in a month will qualify for free executions in the auction for that symbol the following month. Free auctions are also available to CLPs the first month of each new listing on BATS.

To track an ETP‘s performance and activity within the ETP, BATS provides a score card to both issuers and CLPs. The score card details SET rankings and other significant metrics, such as CLP market share percentage, and the average trade size.

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