The NYSE’s Proposal to Alter Exchange Fees

Bloomberg has an interesting story on Intercontinental Exchange‘s (ICE) proposal to alter how stock exchanges make money. ICE (owner of the NYSE) wants to freeze rates they can charge for market data.

The SEC wants an incentive system. The drawback under that plan is that trades would be routed to the exchange that paid the most, not that best served the client.

ICE’s plan is to “reduce the maximum amount exchanges can charge for trades to 10 cents per 100 shares, from 30 cents.” They claim that would dramatically reduce the amount of rebates. More importantly, ICE wants exchanges to agree not to raise fees for “existing market data products, connectivity services and co-location.” This is a sensitive topic, and many investors already think the data fees are too high.

“We recognize that a large part of the industry’s support for the Transaction Fee Pilot is driven by a desire to reduce their cost to trade,” according to the NYSE letter. “We propose addressing this concern by taking fixed cost growth off the table during the Alternative Pilot and reducing the existing Access Fee Cap.”

Some in the industry would like to see market-data rates comes down, so simply freezing them, and thereby keeping the status quo, might not alleviate their concerns.

Posted by on October 4th, 2018 at 10:15 am


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