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Advanced Computerised Execution System (ACES) definition

How the Advanced Computerised Execution (ACES) System is automating the execution process for trades and orders between market makers and order-entry firms.

What is Advanced Computerised Execution System (ACES)?

ACES is a subscription service provided by NASDAQ available to order-entry companies (brokers, dealers) and market makers. Market makers are charged on a per execution basis, and the price can be anywhere from $0.15 (£0.12, €0.14) up to $0.70 per execution. The fee depends on the number of orders in a given month. They are also charged with a rejection fee of $1 for each order rejected by ACES.

Order-entry firms pay a fixed monthly subscription rate for access to Weblink ACES. They could also be charged with execution fees. Weblink ACES is created for small order-entry firms planning to automate their order-routing system. Moreover, they can connect directly with the market makers subscribed to ACES.

ACES connects brokers and dealers with the market makers automatically, enabling a swift execution of orders and trades between participants with established trading relationships. Market makers create a routing relationship with order-entry firms, while brokers and dealers place orders on the internal trading system of the market makers. Consequently, the market maker provides orders-related information.

ACES provide several benefits for its participants:

  • Better control of placed orders
  • Ability to cancel active orders
  • Access to average prices for partly filled orders and executed orders
  • Automatic entry of orders – eliminating the need for phone calls or emails from order-entry firms

Market makers (also called liquidity providers) are companies quoting buy and sell prices for a financial instrument. They earn a profit from the spread between the buy and sell prices.

Order-entry firms are members of NASDAQ and they can place trading orders. They have access to the bid and ask prices along with the quotes provided by the market maker firms for securities traded on the exchange.

The ACES system increases efficiency for market makers to compete for order flow and increase revenue levels. The system allows them to sponsor the access of order-entry firms in order to attract a higher number of route orders.

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