The Securities Industry and Financial Markets Association (SIFMA) has given the recently submitted plan for equity market structure reform by BATS Global Markets its nod of approval.
SIFMA, in a comment letter to the Securities and Exchange Commission, wrote that the industry trade group supports the exchange’s request to cut exchange fees and increase disclosure to investors about stock orders. The plan, as suggested by BATS Global Markets, they said would increase market transparency and reduce complexity.
In its petition, BATS formally requested the SEC adopt amendments to Rules 600(b)(57) (definition of a protected bid or offer), 605 and 606 (disclosure of order execution and order routing information), and 610(c) (the access fee cap) of Regulation NMS.
“…SIFMA believes there are aspects of market structure that could be enhanced through steps designed to decrease unnecessary market complexity, increase transparency of market information, and promote fairness in access,” SIFMA wrote.
SIFMA added, “BATS has requested that the Commission engage in rulemaking that would result in: (1) tiering access fees starting at $0.0005 per share (5 cents per 100 hundred shares); (2) increasing order handling and execution transparency; and (3) revising the definition of a protected bid or offer and the distribution of market data revenue to address the proliferation of national securities exchanges. The specific measures that BATS has proposed in its petition are, in practical effect, consistent with SIFMA’s recommendations and we are pleased to support them.”
The trade group also commented on the market’s access fee cap under Rule 610 which they wrote, should be amended.
“At the same time, we encourage the Commission to consider reasonable alternatives, which could include a tiered approach as a means of continuing to adequately incentivize liquidity provision in less liquid names, or a uniform access fee reduction as a means to avoid unnecessary market complexity. In either case, a reduction in access fees should be accompanied by monitoring and measuring the potential impact of reduced access fees and rebates on liquidity and spreads, particularly in less liquid names.”
Also, SIFMA said it supports the BATS proposal to tie protected quotation status to a meaningful volume threshold. In our recommendations, we recommended that the SEC amend the definition of “protected quotation” under Regulation NMS so that it applies only to the displayed quotations of a market center with one percent (1%) or more of the average daily dollar volume in all NMS stocks over a period of three consecutive calendar quarters.
