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SEC forging ahead with proposal on experimentally lowering access fee caps

First Published 27th April 2017

Lower for longer?

Brokers have long been lobbying for lower exchange access fees (currently capped by SEC rules at 0.30 USD/100 shares, equivalent to 0.0030 USD/share).

In July last year the SEC started conversations around an "Access Fee Pilot" and it seems that this experiment is gaining momentum inside the SEC.

The pilot program would look similar to the current Tick-size Pilot Program, where a number of stocks would be selected into a number of groups, each with their own access fee caps. The SEC wants to make sure that this does not distort market dynamics in some unintentional way, although it is not clear how lower fees are ever a problem for any market. But what do we know?

The new pilot is also supposed to put a cap on rebates in maker/taker models. This is a potentially more interesting twist as the effects of lower rebates are not as straightforward as the effects of lower fees.

One of the chief complaints is that high exchange access fees have pushed more trading out of the light into the dark - dark pools and other crossing facilities.

Through such a pilot program, the agency would be able to determine how order routing practices are affected by fee structures, how trading in dark pools evolves and whether or not exchanges should be allowed to provide rebates.

Jay Clayton, the nominee for SEC's chairman, is rumored to be strongly in favor of the plan. There is no timeline for the program yet, but watch this space.