Bats Global Markets Holdings Inc. is introducing a flat-fee structure to one of its smallest exchanges as the industry weighs the merits of the "maker-taker" fee model that dominates today's exchanges.
The CBOE Holdings Inc.-owned exchange operator said May 30 that its EDGA Equities Exchange will adapt a single standard rate of .03 cent for any orders that add displayed liquidity or remove displayed liquidity, beginning June 1. Previously, the exchange operated on an inverted pricing model.
For non-displayed orders, adding liquidity to the EDGA Equities Exchange will be free, while removing liquidity will cost .05 cent. Bats said that all exchange participants qualify for the rates, and that there are no pricing tiers.
The move comes as much of the industry debates a pilot program from the Securities and Exchange Commission, proposed by the Equity Market Structure Advisory Committee to review the "maker-taker" model. The model emerged in the late 1990s as a way for new electronic communication networks to gain market structure. The pilot was first recommended in early July 2016. The model offers a rebate to liquidity providers, while charging a fee to liquidity takers.
Several exchange officials have previously commented on the possible pilot program including Nasdaq Inc. former CEO Robert Greifeld, who said in July 2016 that the exchange operator backs a pilot program and lowering fees. IEX Services LLC's Investors Exchange currently operates with a flat-fee model.
"Over a decade ago, EDGA became the first market to break away from the maker-taker fee model employed by most other equity exchanges, Bryan Harkins, Bats' head of U.S. equities and global foreign exchange, said in a statement. "We believe the time is right to relaunch a low-cost, simple pricing structure following widespread discussions with our customers on topics like the access fee pilot.