SEC delays its disputed plan to resolve exchange rate conflicts

NEW YORK (Reuters) – The US Securities and Exchange Commission on Thursday postponed a controversial plan to badess the impact of stock market commissions and incentives on how brokers trade, while stock markets continue to regulate. justice to try to stop the experiment.

In December, the SEC approved its so-called "Transaction Fee Pilot", which aimed to determine to what extent the lucrative rebates paid to stockbrokers for stock orders that others could trade against the behavior of brokers.

However, Nasdaq Inc., Cboe Global Markets and NYSE Intercontinental Exchange Inc., which together hold 12 of the 13 US stock exchanges, filed suit against the SEC in February, claiming that the plan was a government price-fixing exercise. and that he would control the competition.

"Without addressing the merits of the petitioners' challenges to the rule or the pilot program, the Commission decided to exercise this discretion to grant a stay, in part. Pending a decision of the court of appeal, "said the SEC suspending its plan Thursday.

Large market operators had stated that the one-year to two-year pilot program would hurt companies whose shares would not be eligible to receive rebates for purchase orders for securities increasing liquidity.

"The Commission's action is a positive development for listed companies and Main Street investors because it recognizes the arbitrary nature of the program and the complexity of its implementation," said Nasdaq spokesman , Joseph Christinat, following the announcement of the SEC.

Cboe also said he was "happy" with the SEC's decision.

In part, the SEC aimed to gather evidence from the experience of determining whether rebates, which amounted to some $ 2.5 billion last year, created conflicts of interest by encouraging brokers to send customer orders at the most profitable stock exchanges. discounts.

Criticism of the rebate regime, which includes some of the world's largest badet managers, could yield better results elsewhere.

The exchanges indicate that the rebates help to attract cash, while compensating brokers, especially market makers, for taking the risk of offering a two-sided bid and asking prices from third parties.

The pilot program was recommended by a committee of market experts appointed by the SEC, as well as by the US Treasury in a report published in late 2017.

Since the SEC has only partially suspended the pilot project, stock exchanges will still need to begin collecting data on the broker order routing behavior to be provided to the regulator if the pilot project continues.