An exchange-sponsored program designed to test lower access fees is now beginning to produce quantifiable results – and they point to lower trading volumes in certain “test” stocks, acccording to Credit Suisse research.
On February, 2, 2015, NasdaqOMX initiated a pilot program to test lower access fees. The pilot program includes 14 stocks – seven listed on the Nasdaq and seven on the NYSE. The new trading fees are now 5 mils for takes and 4 mil rebate, which is down from a potential max take fee of 30 mils.
The test program is slated to end May 29th.
According to researchers at Credit Suisse who have been collecting data to assess the market implications of lower fees, the program has now produced some definitive results. First, the broker noted on average, Nasdaq has lost market share in the pilot securities.
Secondly, Nasdaq’s share of pilot Nasdaq listings is now about 5 percent lower than their share of all other Nasdaq listings. Lastly, Nasdaq’s share of pilot NYSE listings is about 4 percent lower than their share of all other NYSE listings.
Ana Avramovic, an analyst in Credit Suisse’s Trading Strategy Group noted that while the pilot program is virtually over, it is difficult to extrapolate from Nasdaq’s limited pilot to draw conclusions on how overall lower access fees would affect the market as a whole.
“As is, with other exchanges offering much higher rebates, liquidity providers may choose to go elsewhere for economic reasons,” she wrote in a research note.
Avramovic added that it should be noted that one time when the lower rates might be attractive is at the end of the day. This is when liquidity providers want to avoid crossing the spread but increase their chances of getting a fill, so they can go to an inverted venue that is more attractive for liquidity takers (or, in this case, the take fee is lower).
“Access fees are still a fraction of spread costs, which are at least 1 cent,” Avramovic wrote.
