The leaders of several exchanges and trading firms recently expressed support for a review of market structure. Speaking at a roundtable hosted by Congressman Scott Garrett (chair of the Capital Markets Subcommittee of the House Financial Services Committee) Jeffrey Sprecher, the Chair of IntercontinentalExchange Inc., advocated for the elimination of maker-taker fees. Specifically, Sprecher argued that brokers should not receive a rebate for routing a customer order to an exchange because the customer is providing the liquidity, not the broker. However, some panelists expressed concern that removing incentives would harm lightly traded securities. Nasdaq-OMX Group Inc. CEO Robert Greifeld, acknowledged that some market making activities are “fair and legitimate,” and instead would focus on instances in which incentives themselves become the goal of trading. Similarly, BATS Global Markets Inc. CEO Joseph Ratterman suggested a system of access fees that would depend on a variety of factors rather than eliminate maker-taker.
The panelists also addressed dark pools, with Greifeld and Sprecher noting that the venues now accept trades of all sizes despite their originally intended use as venues for large block orders. Greifeld cited an average dark pool trade size of 187 shares. Both called for the SEC to reform dark pools through increased regulation and disclosure.
A recording of the hearing can be accessed here.