| WASHINGTON, July 7
WASHINGTON, July 7 The New York Stock Exchange
and two prominent asset managers will call for reforms on
Tuesday to lower the cap on fees exchanges can charge brokers to
enter the market, according to prepared testimony reviewed by
The call for lowering so-called "access fees" is just one of
several reforms Intercontinental Exchange Chief
Executive Jeffrey Sprecher, Citadel CEO Kenneth Griffin and
Invesco global trading head Kevin Cronin will discuss before the
U.S. Senate Banking Committee.
Federal regulations governing "Reg NMS" stocks - essentially
securities not traded over the counter - currently impose a
maximum cap of 30 cents per 100 shares on what public exchanges
are able to charge brokers to access a stock quote.
Brokers who take liquidity away from exchanges are charged
this fee. Exchanges can in turn use those fees to reward brokers
that bring more liquidity to the market in the form of rebates,
in a pricing model known as "maker-taker."
"The current...access fee of 30 cents per 100 shares is now
significantly greater than the cost of providing matching
services by the exchanges and should be reduced to reflect the
current competitive reality," said Griffin.
The Senate Banking Committee's hearing on Tuesday was
primarily convened to focus on the role that high-speed traders
play in the equity markets, and whether they are putting some
investors at a disadvantage.
However, in recent weeks, the maker-taker model used by
exchanges has also come under scrutiny.
In another Senate hearing last month, a top official from
the NYSE called for banning the maker-taker model. On Tuesday,
Sprecher will reiterate this view, saying such rebates "add to
complexity and the appearance of conflicts of interest."
Cronin on Tuesday also plans to call for banning the
maker-taker model. However, Citadel and a few other Wall Street
executives will warn that completely scrapping the model goes
too far as they see the incentives it provides are beneficial.
"Exchange rebates encourage exchange and liquidity providers
to be more competitive," Griffin said.
He noted that reducing the maximum access fee would
"materially reduce exchange rebates."
Griffin added that access fee caps should also be expanded
to include other markets not governed by Reg NMS, a commonly
used abbreviation for the U.S. national market system.
(Additional reporting by Herbert Lash in New York; reporting by
Sarah N. Lynch; editing by Andrew Hay)