US exchange operator Direct Edge has released its latest incentive for high-frequency trading by offering active market participants a reduced fee to remove and route shares.
Direct Edge, which operates the EDGA and EDGX exchanges, is offering members of EDGX’s Mega Tier a lower fee of US$0.0020 per share when taking liquidity.
Only participants that add or route at least two million shares in average daily volume prior to 9.30am or after 4pm and add a minimum of 35 million shares overall quality for the Mega Tier. Those members receive a US$0.0035 rebate when posting shares.
Direct Edge was one of the US exchanges that introduced order cancellation fees last year with its Message Efficiency Incentive Program, which cut rebates by US$0.0001 per share for members with message-to-trade ratios over 100:1.
The program ended three months later, with some market participants suggesting that the move had been set too high to make a difference in the market.
Direct Edge last year moved its EDGA Exchange from a maker-taker to a taker-maker pricing model, allowing members to receive rebates for removing liquidity while charging for adding liquidity.
Trading fee schedules have been under examination from regulators recently due to their capacity to direct trading to venues that offer rebates rather than best price for clients.