The Pricing Spread End Game
Traders Magazine, February, 2008 by Nina Mehta
Maker/taker spreads have collapsed. While exchanges and ECNs have pushed their rebates higher over the past several months to attract limit-order traders, their liquidity-taker charges hit a Securities and Exchange Commission-imposed ceiling for access fees at 30 cents per 100 shares.
The upshot is that spreads have decreased at nearly every market center from 10 cents per 100 shares a couple of years ago to just 1 cent today. The phenomenon begs the question of whether players can survive at those price levels.
"There's continuous competition," said Joe Ratterman, president and CEO of BATS Trading. "That's forcing market centers to respond. Customers we all have in common are seeking more aggressive economic benefits." Ratterman noted that his ECN has driven some...
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