If Securities and Exchange Commission Commissioner Luis Aguilar has his way rebates could possibly become a thing of the past.
Aguilar said at the recent SEC Hearing on Access Fees, held on October 27, that he recommended that a pilot program should be initiated to study the effects of rebate suspension in most liquid stocks.
“Rebates may distort routing decisions as they create conflicts of interest between brokers and their customers,” Aguilar said.
Also present at the hearing, Richard Holly of the Commissions Division of Trading and Markets also recommended options to address broker conflicts. He advocated the reduction of the access fee cap or ban the fees outright. He did concede that this could push up trading costs for mom and opo retail investors.
He also wanted to keep maker-taker pricing in less liquid stocks, require fees and rebates to be passed back to customers.
Lastly, Michael Buek, a principal at mega money manager Vanguard, also agreed with Commission Aguilar that a pilot create a pilot program that suspends rebates alongside a trade-at proviso. The combination of the two in a single pilot program can achieve multiple goals in a single program. To further his point, vanguard took the position that it would post more limit orders if this type of pilot was initiated.
