BATS Global Markets on Tuesday proposed that equity exchanges implement tiered market-access fees that would cut those fees for the 200 most actively traded U.S. stocks by 80%.
The proposal is one of several BATS presented in a letter to industry participants and in a filing with the SEC. The exchange operator estimated that annual marketwide savings by the fee reductions could reach $850 million.
Along with the access fee reduction, BATS proposed:
- more disclosure of broker-dealer routing and order handling by automated trading systems;
- a 1% daily volume minimum in any rolling three-month period for markets to be considered protected under Regulation NMS;
- no trade-at rule; and
- no ban on maker-taker incentives, which are transaction rebates to those who provide liquidity.
In the letter, BATS attacked a “grand compromise” proposed last month by NYSE Group to investors and brokers that, along with cuts in trading fees, would keep most trades off private venues like automated trading systems and dark pools, and stop maker-taker incentives.
“BATS believes that a ‘grand compromise’ between industry professionals would ultimately be harmful to end investors,” the letter said. “While exchanges, including BATS, would stand to benefit from increased volume directed to them, and brokers would benefit from a reduction in exchange fees, investors will likely pay more both in the form of potentially wider spreads as well as fewer and inferior execution choices resulting from restrictions on competition.”
The complete letter is available on BATS’ website.