An SEC transaction fee pilot program to see how exchanges charge customers should not be held up in court, the Council of Institutional Investors and Investment Company Institute said in a joint amicus brief filed Thursday.
The pilot program “is urgently needed,” the groups said, “to illuminate the full range of problems associated with current transaction fee pricing models.”
CII general counsel Jeff Mahoney said in an email that “CII has supported the transaction fee pilot through its proposal and its adoption and now in front of the D.C. Circuit because the SEC’s ability to address the harm from rebates is critical to the interests of pension funds and all institutional investors.”
The two-year pilot program was approved by the Securities and Exchange Commission in December but put largely on hold after legal challenges from New York Stock Exchange, Nasdaq and Cboe Global Markets Inc. were filed in February in the U.S. Court of Appeals for the District of Columbia Circuit. Three prominent high-speed trading firms — Citadel Securities, GTS Securities and IMC’s U.S. division — are backing the exchanges’ effort to stop the transaction fee pilot program before it begins.
Exchange operator IEX Group filed an amicus brief supporting the pilot.
SEC lawyers argued in court documents filed July 25 that court review is not needed, disputing the exchanges’ argument that the SEC is engaging in “harmful experimentation with the market.” Those arguments “either entirely ignore or fail to meaningfully grapple with the commission’s reasoning,” the CII/ICI brief said.
Oral arguments are scheduled for Oct. 11.