| NEW YORK, July 17
NEW YORK, July 17 The U.S. Securities and
Exchange Commission has denied a plan by Nasdaq OMX Group Inc
to offer rebates to some of the biggest customers of
one of its options exchanges, based on the amount of trading
they do across all three of Nasdaq's options markets.
Nasdaq's plan would have run afoul of rules stating that an
exchange's fees cannot be unfairly discriminatory or hinder
competition, the SEC said in an order posted on its website on
The U.S. options market is fiercely competitive, with 12
exchanges owned by six different exchange operators, including
Nasdaq, Intercontinental Exchange Inc, and CBOE Holdings
Inc. There are also 11 U.S. stock exchanges, many owned
by the same corporate parents as the options exchanges, and
dozens of bank- or broker-owned private trading venues.
By having more than one exchange, the parent companies can
offer more than one type of pricing model, allowing them to
target different types of customers. Under U.S. law, each
exchange is supposed to compete with the others, even if they
are owned by the same parent.
Had Nasdaq's plan been allowed, it could have had
far-reaching effects on competition, pricing and complexity
across the financial markets, as it would have effectively
broken down the walls between the units of the big exchange
That idea alarmed smaller rivals, such as Deutsche Boerse's
International Securities Exchange and MIAX Options
Exchange, which said in letters to the SEC that tearing down
those barriers would allow Nasdaq and other large operators to
offer pricing that they could not compete with.
"Can exchanges that supposedly compete against each other
cooperate to establish joint fees?" ISE wrote in a letter to the
SEC. "We believe that the answer is a resounding 'No.'"
Nasdaq will evaluate the SEC's decision and the company's
options before deciding whether to pursue the matter, a
spokesman said on Thursday.
(Reporting by John McCrank; Editing by Tom Brown)