It seems to me like cancellation fees would deter people from placing orders in the first place, which would reduce liquidity a lot. So exchanges are shooting themselves in the foot with high cancellation fees. Change my mind.
When you cancel an order, you are actually removing liquidity from the book and they don't want this to happen, hence why they charge the cancellation fee. It's unfair by all means because they don't credit you when you place your order (Inject liquidity), they only credit you when your order gets executed while being a maker (Not a taker). They are not shooting themselves in the foot, but the rule is ideally unfair, but that's what it is. Trade elsewhere if you don't like it.
It's a general question or are you annoyed that it is passed on to you? Asking because I wasn't expecting any broker passing this on to customers? IB did but they stopped doing this years ago...
It looks like they are not there anymore (I checked on IB website, they are not there), though they charge cancellation/modification fees for orders directed through the API (US stocks) in special cases. But it's true, the option exchanges used to charge order cancellation fees before, but maybe things changed and this is now gone. I am not trading options heavily since 2015, just a couple of trades every now & then.
Wasn't this about the time they instituted the whole Pro Customer fee schedule? Basically now if you put too many orders in (390 average per day) you pay much more in exchange fees.