SEC Considering Access-Fee Cap For Some Options Exchanges

The Securities and Exchange Commission on Wednesday said it will consider proposing new rules to cap trading fees for customers of some options exchanges.

The proposal seeks to more closely align the actual cost of executing an options trade with the additional costs of accessing quotes on exchanges and the wide range of fees charged by different markets, according agency documents.

"In practice, the displayed quotation on an options exchange may not reflect the actual amount a person will pay to buy or sell the option," SEC staff wrote in a statement.

"Instead, the person often incurs additional costs to conduct the transaction, including the cost of accessing the exchange's quotation."

The proposal addresses a long-simmering debate in the options industry over whether or not exchange fees should be assessed in a way that is similar to the U.S. stock market.

New rules would target options markets running a so-called maker-taker pricing model, in which market makers receive rebate payments from the exchange to provide liquidity to the market, and customers are charged fees for trades that remove liquidity.

Those fees, according to the SEC, aren't part of the displayed quote, and can make it harder for investors to figure the exact cost of doing business.

The potential rule would cap such access fees at 30 cents per contract, and extend rules prohibiting exchanges from imposing "unfairly discriminatory terms" to cover options trading.

Maker-taker pricing has been around for years, but has picked up steam recently.

NYSE Euronext's Arca platform is the largest U.S. options exchange by volume that runs a pure make-or-take model, but January saw Nasdaq OMX Group Inc. (NDAQ) roll out such pricing at its PHLX platform, and the International Securities Exchange has introduced its own version as well.

Smaller exchanges, including the Nasdaq Options Market and BATS Options, also run full maker-taker venues.

Separately, the SEC also said it is considering a proposal that would require firms engaged in high-frequency trading to carry unique identifiers, enabling regulators to more closely track their activities in U.S. markets.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

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