The SEC requested feedback on a draft schema and technical specifications pursuant to the recently adopted Transaction Fee Pilot for National Market System ("NMS") Stocks (the "Pilot"). The Pilot will require certain exchanges to use the draft schema and the corresponding draft technical specifications to post information about their fees and fee changes. Comments must be submitted by January 23, 2019.
As previously covered, the SEC adopted a new rule that would establish the Pilot in order to study the effects that transaction-based fees and rebates in certain NMS stocks may have on order-routing behavior, execution quality and market quality generally. The Pilot will be applicable to all stock exchanges and will last for up to two years.
According to the SEC, the Pilot will create two test groups of exchanges, with one group barred "from offering rebates and linked pricing" and the other group limited to a fee cap of $0.0010. The data from the Pilot will be utilized to facilitate an empirical assessment of the market impact of an exchange's transaction-based fees and rebate structure.
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