NYSE official calls for ending 'maker-taker' pricing structure

WASHINGTON, June 17 Tue Jun 17, 2014 9:20am EDT

WASHINGTON, June 17 (Reuters) - A top New York Stock Exchange official is calling for eliminating the lucrative "maker-taker" pricing system used by stock exchanges across the industry, saying it creates too many conflicts of interest and market complexities.

"At an industry level, we are seeking support for the elimination of maker-taker pricing and the use of rebates," said Tom Farley, the president of IntercontinentalExchange's NYSE Group, in prepared testimony before a U.S. Senate investigative panel that convened Tuesday to explore how potential conflicted pricing structures and high-speed trading impact equity markets.

In the maker-taker model, brokerages earn rebates by sending in resting orders to bring more liquidity, but must pay fees if they take away liquidity through orders that can be executed immediately.

Farley also said his exchange plans to impose a six-month moratorium on permitting any "new or novel" order types. (Reporting by Sarah N. Lynch; Editing by Eric Beech)

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