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The Pricing Spread End Game

Traders Magazine, February 2008

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.

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