In an open letter to the securities industry, BATS Global Markets calls for sweeping changes to the U.S. equity market structure.
In its letter, BATS says that it supports an end to “maker-taker” fee structures; it calls for the introduction of a 1% market share threshold for trade-through protection; greater transparency about order routing; and the introduction of tiered market access fees.
The exchange firm says that cutting access fees by as much as 80% for the most liquid stocks, and allowing different fee levels for different securities (based on volume) would benefit both issuers and investors, and encourage trading more in thinly-traded issues. It is proposing the implementation of tiered market access fees, starting at 5¢ per 100 shares for the most liquid U.S. securities. BATS estimates that the total savings from lower access fees may exceed $850 million annually.
“While the highly efficient, fair and transparent U.S. equity market is widely viewed as the world’s most competitive market, a one-size-fits-all approach may no longer best meet the needs of end investors, issuers and the industry’s many participants,” said BATS CEO Joe Ratterman. “The market has long been defined by its continuous quest for improvement, and we believe a material reduction in access fees for the most liquid securities, coupled with an intelligently tiered approach for less liquid stocks, is an excellent place to begin.
“We look forward to a broad discussion of this proposal and other key market structure topics in the months ahead,” Ratterman said.
Many of these same issues are already under consideration in Canadian markets too. For example, Canadian regulators have proposed adopting their own market share threshold for trade-through protection; and, they have also pledged to study maker-taker fee models; among other possible market structure reforms.