NEW YORK (Reuters) - A proposed regulatory experiment to test the effects of lowering stock exchange fees could end up making stocks harder to trade and should be delayed pending a comprehensive market review, the three largest U.S. stock exchange operators said in a letter to the Securities and Exchange Commission. Forcing exchanges to lower the fees they charge for matching buy and sell orders would also cut into the amount of rebates the exchanges could pay market makers, the brokers who provide buy and sell quotes, the exchanges said in the Oct. 13 letter. SPONSORED “Harming this critical component of our markets could have unintended cascading and irreversible effects,” said the letter by the heads of the New York Stock Exchange, which is owned by Intercontinental Exchange (ICE.N); CBOE (CBOE.O), which owns No. 2 U.S. stock exchange Bats; and Nasdaq Inc (NDAQ.O). The three exchange operators collectively pay around $2.5 billion a year in rebates, which they say compensate market makers the risks of providing liquidity. Without that additional liquidity, investors, listed companies, and exchanges would all suffer, they said. Critics say those payments create conflicts of interest by giving incentives for brokers to send their customers’ orders to the exchanges with the biggest rebates rather than to exchanges that would get the best result for the end clients. Currently, the fees exchanges can charge for trades they execute are capped at 30 cents per 100 shares. Rebates, which not all exchanges pay, are generally in line with the fee cap. A so-called access fee pilot, proposed in July 2016 by a committee of market experts picked by the SEC, would test capping fees as low as 2 cents per hundred shares for some stocks, reducing the amount of funds available to pay rebates. The exchanges also said that without the ability to pay rebates, it would be harder for them to compete with private broker-run trading venues, known as dark pools, which have fewer regulatory burdens. The SEC should proceed with the pilot only as part of a much broader market review, and not in isolation, they said. SEC Chairman Jay Clayton said in July that a proposal for the pilot would be tabled in the coming months and that there seemed to be a consensus in the market on going ahead with the plan.
"we have a duopoly and can milk the customers as we please, there's no reason for anything to change, trust us!". Technology costs have gone down massively, yet trades costs the same (or more at IB compared to few years ago).
As much as I always would want lower trading fees, this is not the way to go. Why don't they and other regulatory agencies cut the regulatory fees they force traders and investors to pay? That would be much better, since they are the parasites stealing money from two parties dealing with each other voluntarily and giving nothing in return(only harm). With no money to fund their useless activity, all the bureaucracy could be eliminated and new competing exchanges could be openned. This is the way, through market competition, to lower fees. But this "theater" goes on... They pretend to be in favor of "the people", when in reality they are just helping to keep the power of the already established exchanges, by blocking their possible new competidors. Same old story... And people still buy this BS.
So you want to disband SEC and FINRA? lol. Even if they only catch the small fish, that's better than nothing. Saying they are useless just displays ignorance. Why are they blocking new exchanges? Because the old exchanges lobby (read: bribe) them to do so.
Actually, you just displayed ignorance and blindness at the same time... You just proved yourself wrong and agreed with me at the same time. That's exactly what I said. Maybe you didn't read or understand my post. If they didn't exist, there would be no regulatory agency to bribe. That means there would be no blocking of new exchanges, which would provide more competition, better services and lower prices.
Except the rate of abuse by exchanges would only accelerate. Try living in places where regulators have zero power, the only prey becomes the customer.
I really enjoy trading on all the unregulated forex exchanges. Without those parasites sucking up a fraction of a percent per share I make so much more money and feel so confident about the fairness of the exchanges and the safety of my funds. You?
This is part of the reason as to why there are now fifteen option exchanges. The regulatory (ORF) fee more than covers the overhead. The SEC may eventually rule against maker/taker and then we'll see a new evolution of exchange models.
Those are actually just another consequence of regulation. The problem is that because regulation is the rule all over the world, these exchanges are the exception, which means there are relatively few of them, which means low competition between them. That has the same result: poor services at high prices. Worse yet, it gives the illusion that regulation actually is beneficial and people become willing to accept regulation despite knowing that they hold competition back, are bribed by the already established exchanges and "only catch the small fish" as the guy in one of the posts above admited while defending regulation. A good analogy is drug criminalization(regulation). By criminalizing(regulating) drugs, governments push the business of drugs to drug traficants and people that are usually not "of the best kind". Not only that, it makes it a lot more profitable for them. If you're interested, here is a good 5 min video related to the subject: