BATS Global Markets (BATS), joined the growing chorus of market operators by proposing several market structure initiatives designed to benefit all investors and issuers, including a reduction of market access fees.
The proposals were made in an open letter to the industry on its website. Among the most drastic and noteworthy proposals were the marketplace’s suggestion of altering and reducing market access fees by 80 percent for the U.S. market’s most liquid securities. Also, a tiered access fee price schedule would apply for all securities, aimed at promoting and encouraging the trading in less liquid securities.
The letter is available right
According to BATS, reduced access fees would also result in reduced rebates in those stocks. For those accessing exchange liquidity in the 200 most actively traded U.S. stocks, BATS estimates market-wide savings may exceed $850 million annually.
“While the highly efficient, fair and transparent U.S. equity market is widely viewed as the world’s most competitive market, a one-size-fits-all approach may no longer best meet the needs of end investors, issuers and the industry’s many participants,” BATS CEO Joe Ratterman said. “The market has long been defined by its continuous quest for improvement, and we believe a material reduction in access fees for the most liquid securities, coupled with an intelligently tiered approach for less liquid stocks, is an excellent place to begin.”
BATS also suggests the following:
–Greater Order Handling Transparency. BATS said that alternative trading systems should be required to provide their rules of operation to customers, and Rules 605 and 606 of Regulation NMS should be amended to require additional disclosure of achieved execution quality on a broker-by-broker basis.
– Higher Standards for Small Trading Centers. The operator also advocated that Regulation NMS should be revised so that, until an exchange or other currently protected market center achieves greater than 1% share of consolidated average daily volume in any rolling three-month period, it should no longer be protected under the trade-through rule, and not share in, or otherwise receive any NMS plan market data revenue. This addresses the concerns of many market participants regarding how the current structure may artificially subsidize competition or encourage complexity that does not address a market need.
