BATS Global Markets (BATS) today proposed market structure initiatives designed to benefit all investors and issuers, including a reduction of more than 80% in access fees for the U.S. stock market's most liquid securities.
“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.”
In an open letter to the industry and a petition for rule-making to the Securities and Exchange Commission, the company will propose the implementation of tiered market access fees, depending upon an individual security’s average daily volume, beginning at $0.0005 per share (five cents per 100 shares) for the most liquid U.S. securities. 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.
“We look forward to a broad discussion of this proposal and other key market structure topics in the months ahead, and we thank SEC Chair White for her continued leadership,” Ratterman said.
BATS also suggests the following:
- Greater Order Handling Transparency. 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 additquired 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. 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.