| NEW YORK, April 26
NEW YORK, April 26 The U.S. Securities and
Exchange Commission is preparing a proposal for a pilot plan to
test how lowering stock exchange fees would affect market
quality and the behavior of market participants, a senior
official at the regulator said on Wednesday.
Acting SEC Chairman Michael Piwowar has asked the staff of
the regulator to come up with a proposal, said David Shillman
associate director of the SEC's Division of Trading and Markets.
"We are working on it diligently," Shillman said on the
sidelines of a Securities Industry and Financial Markets
Association conference, adding that there was no firm deadline
to present a plan that would be put out for public comment.
An SEC advisory committee recommended the pilot in April
Brokers have long complained that exchange "access fees,"
which are capped at 30 cents for every 100 shares executed, are
too expensive and are one of the main reasons so many orders are
executed on private trading platforms that compete with public
The pilot, as recommended by the SEC advisory committee,
would also cap the rebates that exchanges pay to brokers for
resting orders they send to the exchanges, providing liquidity
for others to trade against.
Some in the market say exchange rebates create conflicts of
interest because they give brokers an incentive to send their
customers' orders to the exchanges with the highest rebates,
rather than the exchanges with the best prices.
A pilot would give the SEC data on how fees and rebates
affect brokers order routing practices, transparency, and other
metrics that would help inform the regulator on whether the fee
and rebate model, known as "maker taker," needs to be changed or
Incoming SEC Chairman Jay Clayton will ultimately decide
whether the pilot goes forward, but there seems to be broad
support for the plan, Shillman said.
The nomination of Clayton, a Wall Street deal-making
attorney, was approved by the Senate Banking Committee earlier
this month. He is expected to easily win confirmation from the
(Reporting by John McCrank; Editing by Andrea Ricci)