Nasdaq introduces an auction model to support less liquid shares on Nasdaq First North Growth Market

Stockholm, March 29, 2023 - Nasdaq (Nasdaq: NDAQ) today, announces a new
auction model targeting illiquid shares on Nasdaq First North Growth Market to
further enhance market integrity and investor protection effective January
2024. 

For more than 15 years, Nasdaq First North Growth Market has served as an
important growth platform, enabling Nordic and international entrepreneurs to
access growth capital to develop and expand their businesses. The liquidity on
Nasdaq's Nordic markets as a whole has improved over the years. However, in
parallel shares of some companies have had challenges with liquidity. When the
spreads become too wide, relatively small orders can create dramatic price
movements. The volatility in these shares can be particularly harmful to retail
investors and dampen overall confidence in market integrity. 

The new model is the result of months of discussions and market analysis
together with industry participants and will change how illiquid shares are
traded to enhance market integrity and investor protection. Companies with more
than seven percent average spread for two consecutive quarters will be
presented with two options. The first option is to hire a liquidity provider
and the second option is to offer trading through an auction model with five
auctions per day: opening auction, 11.00, 13.00, 15.00 and closing auction.
Initially, it will be implemented for Nasdaq First North Growth Market Sweden
and Finland. Due to technical limitations the auction model will be postponed
for Nasdaq First North Growth Market Denmark. 

- Having a liquidity provider is an
investment that is beneficial for both investors and the company. Investors are
protected from high spreads making it easier to enter and exit positions and
reduces the risk and cost of trade. In our research, we also see that the stock
price response on average is positive and the fact that improved liquidity also
improves possibilities to access new capital, says Nikolaj Kosakewitsch, Head
of European Equities & Derivatives at Nasdaq 

First North Growth Market Rulebook for Issuers of Shares will be
updated during the annual change on July 1, 2023 and additional information on
the new auction segment will be set out in the Nasdaq Nordic INET Market Model
effective July 3, 2023. To ensure that stakeholders which are impacted by the
change have sufficient time to adapt, the new rules will be effective when data
from Q3 and Q4 has been analyzed and trading in the new auction segment will
start on January 18, 2024. 

- Nasdaq is committed to ongoing
dialogues to support our issuers throughout the process. In addition to
actively addressing the unique challenges and concerns faced by small growth
companies today, we will continue to review and assess their trading experience
with the new trading model once it's implemented. We are hopeful that the new
trading model will improve price formation and trading experience of the less
liquid shares, as well as further enhance quality and integrity of our markets,
says Adam Kostyál Head of European Listings at Nasdaq 

Based on data we analyzed in 3rd quarter and 4th quarter of 2022,
28 firms listed on Nasdaq First North Growth Market Sweden are affected by the
changes. This is subject to change as Q3 and Q4 data from 2023 will determine
which companies that are affected by the change. Due to technical limitations
among some Danish trading members the auction model will be postponed for
Nasdaq First North Growth Market Denmark and initially be implemented only for
Nasdaq First North Growth Market Sweden and Finland. We will continue the
dialogue with Danish members to determine when and how they will be able to
offer auction trading. 

About Nasdaq

Nasdaq (Nasdaq: NDAQ) is a global technology company serving the capital
markets and other industries. Our diverse offering of data, analytics, software
and services enables clients to optimize and execute their business vision with
confidence. To learn more about the company, technology solutions and career
opportunities, visit us on LinkedIn, on Twitter @Nasdaq, or at www.nasdaq.com. 

Nasdaq Media Contact

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