Boston Options Exchange Eliminates Make Or Take Pricing
August 28 2009 - 11:35AM
Dow Jones News
The Boston Options Exchange announced Friday it will drop a
pricing scheme for some options contracts after it failed to draw
business.
The move follows a similar fee shake-up in June, aimed at
attracting more trade in options on exchange-traded funds.
The Boston Options Exchange, or BOX, now plans to eliminate
so-called "make or take" pricing on options that trade in penny
increments, pending approval from the Securities and Exchange
Commission.
Under this pricing scheme, exchange customers who remove
liquidity from markets in penny-priced options pay a fee, whereas
customers providing liquidity earn rebates.
The maker-taker model for options, also employed by NYSE
Euronext (NYX) and Nasdaq OMX (NDAQ), is geared toward high-speed
electronic participants that move in and out of markets
rapidly.
"Make or Take pricing was an experiment which failed to raise
BOX's market share," said William Easley, vice chairman of BOX, in
a statement. "We often found ourselves as last choice on
inter-market linkage routers even when we matched [the national
best bid or offer]."
Starting in September, BOX's public customers won't have to pay
a trading fee on the 57 classes of penny-priced options, whereas
all other customers will pay 20 cents per contract.
In July, the all-electronic BOX market dropped taker fees on
three ETFs in a bid to boost volume - the SPDR Trust Series I
(SPY), the PowerShares QQQ Trust (QQQQ) and the iShares Russell
2000 Index Fund (IWM).
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com