The Securities and Exchange Commission (SEC) proposed a new rule this week that would prohibit national securities exchanges from offering volume-based transaction pricing in certain cases.
The prohibition would be in connection with the execution of agency or riskless principal orders in NMS stocks. The proposal would also require national securities exchanges to have certain anti-evasion rules and policies, and disclose certain information, if they offer volume-based transaction pricing for member proprietary volume in national market system, or NMS, stocks.
“Currently, the playing field upon which broker-dealers compete is unlevel,” SEC Chair Gary Gensler said. “Through volume-based transaction pricing, mid-sized and smaller broker-dealers effectively pay higher fees than larger brokers to trade on most exchanges. We have heard from a number of market participants that volume-based transaction pricing along with related market practices raise concerns about competition in the markets. I am pleased to support this proposal because it will elicit important public feedback on how the Commission can best promote competition amongst equity market participants.”
Further, under proposed Rule 6b-1, exchanges would be required to submit this information to the SEC on a monthly basis. The public would be able to access the information through the Commission’s EDGAR system.
The public comment period will remain open until 60 days after the date of publication of the proposing release in the Federal Register.