April 2 The U.S. Securities and Exchange
Commission should consider a temporary program to test the
effects of banning the most common method of pricing used by
stock exchanges, as it may cause conflicts of interest, a
commissioner at the regulator said on Wednesday.
The "maker-taker" model gives rebates to brokers that
provide liquidity to the exchanges by sending them resting
orders for others to execute against. Those that take liquidity,
by sending an order that can be immediately executed, pay a fee.
The SEC should seriously consider implementing a pilot
program that would temporarily ban maker-taker rebates for
certain securities, said SEC Commissioner Luis Aguilar.
"Many have observed that the maker-taker model may present a
conflict of interest between brokers and their customers because
broker-dealers are incentivized to send customer orders to the
venue that pays the best maker-taker rebate, and not necessarily
the venue that provides best execution," he said a speech.
The idea is that the pilot program would allow the SEC to
study the effects of the maker-taker model on brokers' order
routing practices, transparency, and other metrics, and would
help inform the discussion on whether the maker-taker model
needs to be changed or eliminated, he said.
Those who have called for the maker-taker system to be
outlawed include Jeffrey Sprecher, chief executive
IntercontinentalExchange Group Inc, which closed its
purchase of the New York Stock Exchange in November.
(Reporting by John McCrank in New York; Editing by Bernard Orr)