About Us  |   Contact Us  |   Register  | Login  |   

Follow HedgeWorld on Twitter HedgeWorld on LinkedIn






HEDGEWORLD NEWS
Search the News
News Archive
HedgeWorld News by Region
United States / Americas
Europe
Asia / Australia
International
HedgeWorld News Sections
Managed Futures & Derivatives
Daily News
Regulatory/Legal
Strategies/Analysis
Technology
Opinion
People
Indexes
Other News Features
Most Popular
Reuters Headlines
Alternative Advantage Daily Newsletter
RSS Service
Sign Up For Email News Alerts
Reprints

NYSE, Citadel, other asset managers call for lowering 'access' fees
By Reuters
Monday, July 07, 2014 Email this story  |  News Tracker  |  Reprints  |  Printable Version

WASHINGTON (Reuters)—The New York Stock Exchange and two prominent asset managers will call for reforms on Tuesday [July 8] to lower the cap on fees exchanges can charge brokers to enter the market, according to prepared testimony reviewed by Reuters.

The call for lowering so-called "access fees" is just one of several reforms Intercontinental Exchange Chief Executive Jeffrey Sprecher, Citadel CEO Kenneth Griffin and Invesco global trading head Kevin Cronin will discuss before the U.S. Senate Banking Committee.

Federal regulations governing "Reg NMS" stocks – essentially securities not traded over the counter – currently impose a maximum cap of 30 cents per 100 shares on what public exchanges are able to charge brokers to access a stock quote.

Brokers who take liquidity away from exchanges are charged this fee. Exchanges can in turn use those fees to reward brokers that bring more liquidity to the market in the form of rebates, in a pricing model known as "maker-taker."

"The current ... access fee of 30 cents per 100 shares is now significantly greater than the cost of providing matching services by the exchanges and should be reduced to reflect the current competitive reality," said Griffin.

The Senate Banking Committee's hearing on Tuesday was primarily convened to focus on the role that high-speed traders play in the equity markets, and whether they are putting some investors at a disadvantage.

However, in recent weeks, the maker-taker model used by exchanges has also come under scrutiny.

In another Senate hearing last month, a top official from the NYSE called for banning the maker-taker model. On Tuesday, Sprecher will reiterate this view, saying such rebates "add to complexity and the appearance of conflicts of interest."

Cronin on Tuesday also plans to call for banning the maker-taker model. However, Citadel and a few other Wall Street executives will warn that completely scrapping the model goes too far as they see the incentives it provides are beneficial.

"Exchange rebates encourage exchange and liquidity providers to be more competitive," Griffin said.

He noted that reducing the maximum access fee would "materially reduce exchange rebates."

Griffin added that access fee caps should also be expanded to include other markets not governed by Reg NMS, a commonly used abbreviation for the U.S. national market system.

By Sarah N. Lynch, with additional reporting by Herbert Lash


Send This Story to a Friend | Order Reprints Online
Send Feedback to the Editors | Receive News Alerts by Email
Display Printable Version of This Story

Story Copyright © 1999-2014 Reuters HedgeWorld All rights reserved.






Lipper    Privacy   User Policy  Legal Disclosure Copyright/DMCA  Site Map    FAQ    Glossary  Thomson Reuters for Hedge Funds
All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of HedgeWorld content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. HedgeWorld is a registered trademark of Thomson Reuters.