"Payment for order flow is a cancer on our markets," said Meyer "Sandy" Frucher, Chairman and CEO of the PHLX. "With the reinstatement by CBOE of their payment for order flow program, we are well past the tipping point of it becoming an overwhelming feature of the options business, and there is little doubt that the practice negatively impacts the quality of the markets."
Frucher added: "Chairman Donaldson has rightly prioritized restoring investor confidence in the markets - particularly with his focus on ensuring common standards of corporate governance in self-regulatory exchanges and the larger corporate arena - as one of his critical objectives. Banning payment for order flow will add another plank in his platform to strengthen our market system by removing financial inducements from the trading environment."
In today's letter to Chairman Donaldson, the PHLX called on the Commission to adopt a rule to ban the practice of exchange-sponsored options payment for order flow programs outright. "A concept release by the Commission on the topic will be too little, too late. We need strong action now," said Frucher.
Click here to read theletter to SEC Chairman William Donaldson.
The Philadelphia Stock Exchange (PHLX) was founded in 1790. The PHLX trades more than 2,200 stocks, 1,016 listed equity options, 12 sectors index options and currency pairs. For more information about the PHLX and its products, visit www.phlx.com.
