The Commission is reforming how exchanges quote individual stock prices, the fees investors pay to access orders on exchanges, and the price transparency of smaller orders. In a change from the status quo, the amendments will also provide real-time disclosure of exchanges’ access fees and rebates. The rules governing current market practices have not been updated in almost two decades, but the Commission’s reforms will result in lower transactions costs that benefit all investors.
Reducing the minimum increment for stocks that currently have a price difference at or near one cent for the highest purchase price and lowest selling price, or spread, will improve market quality. This change will address pricing inefficiencies caused by artificially wide spreads that could be lower if they were set by market forces.
Reducing access fee caps will increase the transparency of stock prices on exchanges. The total costs of listed stocks, including fees, are not currently transparent. High access fees also create potential conflicts of interest between firms and their customers. Firms have an incentive to route orders to exchanges either to take advantage of higher rebates or to avoid higher fees.
Today’s reforms will diminish this incentive and provide greater transparency to customers about costs at the time of trade.
Lastly, the reforms will increase transparency and availability of information regarding better priced small orders in the market.
I am pleased to support today’s reforms, designed to strengthen market quality, increase price transparency, and foster competition that will benefit retail investors and all market participants.
