Stock Exchanges to Test Trading Minus Rebates Seen as Posing Conflict

Discussion in 'Wall St. News' started by ajacobson, Dec 20, 2018.

  1. ajacobson

    ajacobson

    d08, Robert Morse and sle like this.
  2. qlai

    qlai

    Why you hope for that? Whom will it benefit? Wouldn't it be just like Futures market ... Members pay almost nothing, but everyone else paying full/premium price either taking or providing? With maker/taker, one can significantly reduce commissions yet enjoy tighter spreads subsidized by the rebates.

    It appears all the changes SEC is doing in the name of the little guys, turn out to be additional revenue streams for the big guys.

    P.S. didn't read article as I don't have access.
     
  3. guru

    guru

    Other articles about this:
    https://www.google.com/search?q=SEC+maker-taker&tbm=nws

    https://www.pionline.com/article/20...-support-of-sec-maker-taker-fee-pilot-program
    "Maker-taker rebates "have been generally criticized by a wide spectrum of asset managers, pension funds, endowments, members of Congress, academics and policymakers, including SEC economists, based on the potential conflict of interest it creates between brokers and their investor clients"
     
    ajacobson likes this.
  4. JSOP

    JSOP

    You don't get the full rebates anyway even if you add liquidity as the little guy. Brokers like IB only shares with you portion of the rebates that you are supposed to get and have ways to turn your otherwise liquidity-adding limit orders to market orders by sending them to the exchanges at the last minute just when they become marketable so you don't get the rebates. And the rest of the brokers just pay for orderflows so they get all the rebates and pass none to you. Trust me, as little guys, you don't get rebates anyway and very little of it rather. What I like to see changed is the banning of payment for orderflows. To me that's a major source of conflict of interest and serious lack of transparency.
     
  5. Robert Morse

    Robert Morse Sponsor

  6. Wouldn’t it make sense to also test the effect of removing sub-pennying?

    Can anyone explain why sub-pennying is not unfair?
     
  7. Robert Morse

    Robert Morse Sponsor

    If the purpose of the sub penny is to step in front of customer orders, I agree. I could see an implementation of 1/2 pennies for stocks under $5 to tighten spreads for all.
     
    d08 and Maverick2608 like this.
  8. qlai

    qlai

    I don't think so. If you send a limit order to a specific venue, you will get a(some) rebate.
    You use some artificial order types, you at the mercy of your platform provider.

    I was under impression that sub-peny is only allowed for internalization and dark pools ... Nothing to do with maker/taker and regulated exchanges. Internalization is how your broker can get you those low fixed rates.

    So everyone thinks that paying for both be providing and taking is better?
     
  9. JSOP

    JSOP

    When they don't hold your limit orders to send them at the last minute to the exchange to turn them into a market order, yes you get *some* rebates.
     
  10. qlai

    qlai

    Which broker holds your directed limit order? Maybe if you use smart route? Still, has nothing to do with exchanges rebates.
     
    #10     Dec 21, 2018