What are the differences between NASDAQ market participant types?

Question

I was looking at the list of NASDAQ market participants: ftp://ftp.nasdaqtrader.com/symboldirectory/mpidlist.txt

From Symbol Look-Up/Directory Data Fields & Definitions, section "Market Participants":

There are several types of NASDAQ participants. Listed below are the characters used with its corresponding market participant type.

A = Agency Quote

C = Electronic Communications Network (ECN)

E = Exchange

M = Market Maker

N = Miscellaneous

O = Order Entry Firm

P = NASDAQ Participant

Q = Query Only Firm

S = Specialist

I don't understand these market participant types.

• "A = Agency Quote" — What is this? There is no example of this in the current list of market participants.
• "C = Electronic Communications Network (ECN)" — I understand this.
• "E = Exchange" — I understand this.
• "M = Market Maker" — I understand this.
• "N = Miscellaneous" — What is this? Could you give examples of the possible activities of a "Miscellaneous" market participant?
• "O = Order Entry Firm" — What is this?
• "P = NASDAQ Participant" — How is this different from all the other types of market participants?
• "Q = Query Only Firm" — For the SEC and NSCC.
• "S = Specialist" — What is this? How does this not fit into "M = Market Maker"? There is only one at the moment: "E*Trade Capital Markets - Execution Services LLC/OTC UTP".

Answer 1

An MPID is a four character identify used on FINRA regulated trading platforms to identify the market participant. The participant does not necessarily have to be trading on NASDAQ to have an MPID but they need to have an MPID to be a participant on NASDAQ and meet certain regulatory obligations (e.g. OATS reporting). The MPID may be shown alongside "Level 3" price quotes in NASDAQ's market data feed (for participants who want this information to be known).

The Participant Type is likely to be determined after the participant filed the form when they applied for an MPID and generally state the regulatory capacity under which the MPID is being used.

To answer your question above, my guesses are as follows:

• Agency Quote - relates to the time when ECNs posted 'Agency Quotes' on NASDAQ (before it became an exchange and was still the National Association of Securities Dealers Automated Quotation system) - see SR-NASD-99-09.
• Miscellaneous - presumably would be used when the MPID is not being used by an order entry firm that doesn't fall into any other category.
• Order Entry Firm - would be most participants who are not in the other categories (i.e. most participants).
• NASDAQ Participant - may be used when an MPID is exclusively used on NASDAQ.
• Specialist is the name for a market maker on NYSE or a Regional Exchange, so a firm that has an MPID that is a Specialist would have this designation.

Ultimately the list is maintained and controlled by FINRA and subject to their rules. If you need to know for sure, you can ask FINRA.

However, I do not think this information would provide any additional alpha.