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Tuesday, August 20, 2019

SEC approves proposal to establish transaction fee pilot in NMS stocks

By Marian Johns | Apr 17, 2018

WASHINGTON, D.C. — The Securities and Exchange Commission (SEC) recently approved a proposal to establish a transaction fee pilot in National Market System (NMS) Stocks Rule 610T of Regulation, designed to obtain data on transaction fees and rebates.

The SEC announced it has approved Rule 610T of Regulation NMS, which would expose stock exchange fee pricing to temporary pricing restrictions among three test groups to gather data which would be publicly posted.

“The proposed pilot is designed to generate data that will provide the commission, market participants and the public with information to facilitate an informed, data-driven discussion about transaction fees and rebates and their impact on order routing behavior, execution quality, and market quality in general,” SEC Chairman Jay Clayton said in a statement.  “I applaud the staff for their work in this important area and their enthusiasm for moving this issue forward.”

The two-year pilot will include test groups with one group banning rebates and linked pricing and other groups that would place caps for removing or providing displayed liquidity, according to the SEC.

The SEC said the data from the pilot will be used to educate the commission, market participants and the public about transaction-based fees and rebates effects and will also help guide any future regulatory actions. 

The SEC also will seek public comment on the pilot proposal for 60 days in the Federal Register.

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