The U.S. Securities and Exchange Commission (SEC) voted Wednesday to adopt a new rule to conduct a trading fee pilot study that will provide the regulator with data to analyze the effects of “maker-taker” fee models on order routing, execution quality, and market quality overall.
“Data from the pilot will be used to facilitate an empirical evaluation of whether the exchange transaction-based fee and rebate structure is operating effectively to further statutory goals and whether there is a need for any potential regulatory action in this area,” the SEC says in a news release.
The U.S. pilot, which will apply to all stock exchanges but not alternative trading systems (ATSs), will create two test groups that set caps on trading fees and rebates. One group will prohibit exchanges from offering rebates, and the other will test a fee cap of 0.10¢. The SEC’s pilot will operate for at least a year, and maybe up to two years.
“I applaud our staff for their thoughtful approach to the design of the transaction fee pilot,” says SEC Chairman Jay Clayton in a statement. ”I expect the data provided by the pilot will help us make effective policy assessments that will benefit our markets and our investors.”
The SEC’s rule will become effective in 60 days, and the commission will announce the pilot
launch date one month before it begins.
On Tuesday, the Canadian Securities Administrators (CSA) unveiled plans for a pilot study into the impact of banning trading fee rebates that would co-ordinate with the U.S. pilot. The CSA’s proposal is out for a 45-day comment period, ending Feb. 1, 2019.