Investors Exchange (IEX) has said it will soon introduce market access charges for the first time on its most active trading members.
The exchange group’s chief executive and co-founder, Brad Katsuyama, said in a statement on social media that a new fee structure will be implemented later this year for a small subset of highly active clients that use extra ‘logical ports’.
Logical ports, also known as trading sessions, are used by broker dealers to submit orders to exchanges. As of October, IEX will offer its members access to five ports for free, and then charge $100 per month for additional ports. Katsuyama said around 25% of IEX’s clients will incur the extra fee.
The move follows IEX’s decision to disclose its costs of producing market data and connectivity earlier this year, which stated that the costs associated with supporting logical ports is around $1.5 million per year, or roughly $83 per month, per port. IEX was the first US exchange operator to publicly disclose its market data and connectivity costs amid widespread debate about overpriced exchange data and connectivity products.
“After disclosing our costs to provide market data and connectivity, we actually had some members encourage us to at least cover our costs in providing these services,” Katsuyama said about the new fee structure.
“We were also focused on ensuring that our new fee filing aligns closely with the requirements of the Securities Exchange Act of 1934… which [requires] that exchanges provide the information necessary to show that fees are fair and reasonable and do not impose a burden on competition.”
Despite market data and connectivity fee filings traditionally effective immediately, IEX said it has decided to delay the adoption of the free structure to provide its members with time to assess the changes, and provide any feedback.
“We are hopeful that our rationale for this change makes sense and that the standard we are setting for exchange fee filings raises the bar for all exchanges going forward,” Katsuyama concluded.