NYSE option venues adjust fees to be competitive

* NYSE's two option platforms implement new price plans

* ISE offers modified maker/taker fee plan for 3 options

* NYSE Arca, Amex, ISE adjustments effective April 1

By Doris Frankel

CHICAGO, April 6 (Reuters) - Exchange operators NYSE Euronext (NYX.N) and the International Securities Exchange introduced options pricing changes over the last week, showing they take seriously a challenge by newcomer BATS.

NYSE Euronext's two option platforms made targeted widespread pricing changes it said were meant to drive down trading costs for market participants, and bring more volume their way in the hotly contested options space.

Those rate changes followed a week after rival ISE announced a modified fee schedule for three actively traded option classes. That represented a small step for the exchange toward the so-called maker-taker pricing model used by BATS Options, NYSE Arca, and Nasdaq OMX's (NDAQ.O) small NOM venue.

All of these incentives became effective on April 1. NYSE Euronext's two Arca and Amex options exchanges announced the new pricing and fee reductions on Monday, while ISE announced its modified maker/taker fee schedule on March 29.

Privately-held BATS Global Markets launched the eighth U.S. options market on Feb. 26 with an aggressive across-the-board rebate-fee structure. The structure differs from the tiered pricing at the NYSE Arca platform that runs a similar "maker-taker" pricing system.

In the maker-taker, exchanges reward participants who add liquidity and charge fees to those who remove liquidity.

Among the price changes NYSE Arca Options introduced are higher posting credits for liquidity providers in electronic transactions in 15 heavily traded option products.

It will also have tiered customer rebates in non penny pilot issues and a reduction in fees that are assessed to so-called Leading Market Makers by the exchange.

NYSE Amex has a traditional fee structure that includes charging fees to professional liquidity providers. Its changes include a reduced electronic broker dealer rate, a lower electronic firm rate and tiered pricing for firm proprietary manual trades.

"These pricing adjustments, combined with our other competitive advantages, are designed to retain and attract additional order flow," Edward Boyle, executive vice president of NYSE Euronext's U.S. options business, said in a statement.

ISE, meanwhile, introduced the fee change for options on the PowerShares QQQ exchange-traded fund QQQQ.P, Citigroup Inc (C.N) and Bank of America Corp (BAC.N) which account for about 10 percent of its volume.

ISE, owned by Deutsche Boerse AG's (DB1Gn.DE) derivatives exchange Eurex, said it introduced the unique fee structure to improve market quality and volume in these options names.

Market makers there get a rebate of 10 cents per contract for posting liquidity in the three option classes if they meet minimum quoting requirements.

ISE's new plan for those names eliminates "payment for order flow," a price structure in which brokers are paid for routing orders to ISE market makers.

Another key point is that ISE is not charging fees for customers providing liquidity for orders of any size and for customers taking liquidity if the orders are less than 100 contracts.

(Reporting by Doris Frankel; Editing by Andrew Hay)