US rivals up stakes in venue price war

Direct Edge has fuelled the price war among US equity trading venues by offering rebates to liquidity providers from 1 July.
By None

Direct Edge has fuelled the price war among US equity trading venues by offering rebates to liquidity providers from 1 July.

The broker-owned alternative trading system has reintroduced a $0.0030-per-share rebate for its most frequent ‘super tier’ traders and launched a new $0.0032-per-share rebate for ‘ultra tier’ customers that add 100 million shares per day on average. Both super and ultra tier customers pay $0.0028 per share to remove liquidity.

Rival venues Nasdaq OMX and BATS Exchange have both altered their pricing in recent months. The price changes are aimed primarily at price-sensitive, high-frequency traders that account for approximately 60% of trading volume in the US equity markets.

Also effective from 1 July, Nasdaq OMX will increase its liquidity provider rebate to $0.0030 for users adding an average of more than 125 million shares a day to its order book. The rebate currently stands at $0.00295. The venue will also reduce the liquidity removal fees on Tape A (New York Stock Exchange-listed stocks) and C securities (Nasdaq-listed stocks) to $0.0027 for firms that add significant liquidity to both Nasdaq and options exchange Nasdaq OMX PHLX – formerly the Philadelphia Stock Exchange.

In May, BATS Exchange announced plans to pay a rebate to firms removing liquidity from its order book under certain conditions as part of its new routing and execution fee schedule. BATS pays market participants $0.0001 per share for removing liquidity through its opt-in Dark Scan strategy for all securities. The Dark Scan strategy allows BATS participants to route orders to its dark liquidity partners, which currently include GETCO Execution Services, Knight Link, Liquidity Ping and Liquidnet H2O.

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