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The SEC adopted a new rule that would establish a pilot program (the "Pilot") to study the effects that transaction-based fees and rebates in certain National Market System ("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.
The rule will become effective 60 days following its publication in the Federal Register. The SEC stated that it will announce the commencement dates for data collection and the Pilot period, as well as provide the list of pilot securities roughly one month before the start of the Pilot period.
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