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April 30, 2003

STA Calls for Action on Access Fees

By Gregory Bresiger

A cap on ECN access fees would certainly not be satisfactory to the Security Traders Association. In fact the STA, in a letter filed with the SEC as Traders went to press, is urging the regulators to "reconsider its position" on ECN access fees.

These fees are hurting the market and hurting many of the members of his organization, according to John Giesea, president of the STA.

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"It has become clear that changing market conditions, such as the narrowing of the spread and the participation of fee charging ECNs in automatic execution systems," Giesea wrote, "may be adversely effecting the profitability of traders and harming the integrity of the public quotation."

The STA has consistently argued that the fees be abolished.

"There is simply no competitive or market structure reason to allow the practice. In addition to its effects on transparency and best execution, there is no justification for allowing one market participant to charge a fee to another market participant when there is no contractual nexus or other agreement between the two parties for the provision or the imposition and payment of fees," Giesea wrote.

What is the SEC going to do, if anything? An SEC spokesman referred Traders Magazine to the comments of Annette Nazareth, the director of its Division of Market Regulation, at last year's STA conference.

Narazeth has criticized SROs for not taking steps on access fees. And she also said that, "It has become clear that changing market conditions, such as the narrowing of the spread and the participation of fee charging ECNs in automatic execution systems, may be adversely affecting the profitability of traders and harming the integrity of the public quotation."

Giesea, in an interview with Traders Magazine, said he realized that the STA has raised these issues many times before. "However, we believe the SEC is close to doing something about this, maybe in a matter of the next few weeks. Once again, we wanted them to know how important this issue is to us," Giesea said.