NYSE raises fees and rebates for traders
Mon Feb 2, 2009 4:46pm EST
By Jonathan Spicer
NEW YORK, Feb 2 (Reuters) - NYSE Euronext (NYX.N), under pressure to speed up trade execution and boost liquidity on the New York Stock Exchange, said on Monday it would raise the fees and rebates for traders on both its Big Board and small-cap Arca platforms.
The company, which operates U.S. markets on a maker-taker basis, boosted both the fees for those who remove trade orders, and the rebates for those who inject orders -- moves intended to attract liquidity from rival exchanges.
The changes are expected to begin March 1, pending regulatory approval.
On the Big Board, which lists many of the world's top banks and corporations, the fee for removing liquidity more than doubled to $0.0018 per share for customers and floor brokers.
NYSE Euronext also raised its transaction fee for market-on-close and limit-on-close orders, which are to be executed as close as possible to the end of the day.
A $0.0010 per-share rebate was added for customers injecting liquidity, while the rebate for floor brokers increased three-fold to $0.0012 per share.
The adjustments are intended to enhance sweeping changes the NYSE began rolling out in October, including the use of new market makers to compete with specialists on the trading floor.
"The goal is really about encouraging more liquidity providing by offering more attractive rebates," Colin Clark, NYSE Euronext's vice president of strategic market analysis, said of the fee changes on a call with reporters.
Clark did not forecast the revenue impact from the fee changes. "There are a lot of moving parts here and the impact is really going to depend ultimately on customer behavior and the interaction of the order flow," he said.
NYSE's maker-taker model charges traders who remove liquidity -- or buy and sell orders -- from the exchange while giving rebates to traders who provide liquidity. The current fee schedule has been in place for more than a year.
On NYSE's electronic Arca platform, which lists smaller companies, customers will receive a slightly higher rebate, $0.0029, than fee, $0.0028 -- an "inverted pricing structure" intended to lure traders from competing venues. Both prices are up 1 cent from the current fee schedule.
PEER PRESSURE
Nasdaq OMX's (NDAQ.O) all-electronic Nasdaq Stock Market, as well as recent upstarts such as BATS Trading, have driven down prices and eaten away NYSE's market share this decade.
NYSE Euronext's share of matched NYSE-listed volume, on Tape A, dipped slightly last week but has held relatively steady at about 42 percent over the last few months.
Some observers say the volatile selloff that began in September lent well to the NYSE's use of floor specialists, who match buy and sell orders.
The world's biggest exchange, measured by the value of its listings, brought in new rules late last year to speed up trading by eliminating the time-consuming step that allowed specialists to see some orders before the public. See: [ID:nN24527081]
NYSE's Clark acknowledged on a call with reporters that at under 10 milliseconds, the Big Board's order execution speed is still slower than competitors.
In a note to clients issued prior to NYSE's fee announcement, Niamh Alexander, analyst at Keefe, Bruyette & Woods, wrote in a note that "signs of a turnaround in the role of the NYSE floor" are emerging as a positive for the firm.
However, Alexander lowered her price and earnings estimates for NYSE Euronext partly because of "more significant price pressure in both the U.S. and European cash equities than we had previously anticipated."
The company also received ratings downgrades from both Goldman Sachs and Raymond James early on Monday. See: [ID:nBNG430343]
NYSE Euronext shares fell 12.4 percent to close at $19.28 on Monday. (Editing by Bernard Orr) |
