Commentary

Richard Repetto
Traders Magazine Online News

Why Do Exchanges Own Multiple Licenses? It's Not Hard To See, Look at the SEC

In this recent research note, Sandler O'Neill + Partners, L.P. Principal Richard Repetto examines why the public exchange operators hold multiple licenses and that rationale behind this phenomenon.

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January 1, 2001

An ECN Wins Case for Access Fees

By William Hoffman

Electronic communications networks, which charge non-subscribers access fees, won a victory recently when an arbitration panel ruled in favor of Bloomberg Tradebook.

The National Association of Securities Dealers' NASD Dispute Resolution unit awarded Tradebook the entire $89,158.50 it sought against U.S. Bancorp Piper Jaffray, in addition to interest.

Bloomberg contended that Piper Jaffray paid the access fees, 1.5 cents a share, for several months in 1997, but discontinued payments in October of the same year. Piper, nonetheless, continued using Tradebook until it was frozen out of the system in March 1998 over non-payment. Bloomberg tried to collect the unpaid fees from Piper.

For its part, Piper charged that the fees were unfair and also contended that the fees breached securities regulations. The panel disagreed.

The access fees charged by ECNs to non-subscribers have rankled market makers since they were introduced after the order handling rules were enacted. Dealers said it was not equitable that non-subscribers had to pay fees for accessing ECN quotes, while market makers could not charge ECNs for accessing dealers' quotes.

In 1999, an NASD panel awarded the Attain ECN, a unit of All-Tech Direct in Montville, N.J., a portion of what it was seeking from Knight Trading Group over non-payment of fees.