At last month's hotly debated SEC market data roundtable, there was passionate discussion over both the nature of competition and fees charged for market data and market access. Some around the table, including IEX, chimed in that exchanges should only charge transaction fees. Market data and connectivity services, they said, should be provided for free.
We disagree. Exchanges are integrated enterprises that bring broad value through trading and technology services, but not all clients use every exchange offering. Allowing investors to order a la carte empowers each to select the blend of services they need. By contrast, charging high transaction fees but "giving away" data and connectivity is like requiring all diners to order a prix fixe tasting menu. Importantly, the current competitive market structure allows investors both choices. While the blend of exchange revenues has shifted from purely transactional to a mix of execution and technology, the overall costs on NYSE markets remain a bargain. In fact, the All-in Cost to Trade on NYSE Group exchanges is lower than on IEX or on many dark pools.
Keep your eyes on the prize: the All-in Cost to Trade on NYSE Group exchanges is less than $0.0007 per share. For our members, compare that to the $0.0009 transaction fee per share that IEX charges for most of its trading, and to a typical ATS fee of $0.0010 per share.
In fact, NYSE's competitiveness is understated in the comparison above as 1) the NYSE group calculation includes some fees associated with multiple NYSE markets, including NYSE Options, and 2) there are still datacenter and telecom fees associated with trading on IEX and dark pools, even if they are earned by unregulated datacenter and telecom providers instead of the trading venue operators.
Some market participants have understandably asked for a full breakdown of our calculation. We are happy to oblige, and stand ready to discuss any market participant's specific All-in Cost to Trade upon request.
Applying separate fees for market data and connectivity allows members to choose the right bundle of products for their specific business. For example, members of multiple NYSE exchanges do not necessarily subscribe to the same market data products or use the same number of logical order ports on each venue. Some participants add and remove liquidity evenly, while others are skewed more toward one style of trading. Because market participants choose different trading, data and connectivity services, it's entirely possible that any given member's All-in Cost to Trade may be lower or higher than the average in our calculation.
What's your own All-in Cost to Trade?
Reach out to us at [email protected] to find out.
Multi-list options broke nearly all volume records in 2021, driven by the growth of retail participation: daily records (24 of the top 25 volume days of all-time came in 2021), monthly ADV records (April was the only month from 2021 not in the top 12 all-time), and yearly ADV records (37.3M ADV in 2021 was nearly 10M more than in 2020 and double the ADV in 2019).
Increased retail activity in the equities market has affected which stocks are trading the most, and when and where those stocks trade. We’ve previously highlighted retail’s impact on pre- and post-market volume and the opening auction, and now focus on the period immediately after the opening auction. Market participants often avoid this time of day due to higher volatility, an approach worth re-evaluating given current trends.
As the home of ETFs, the NYSE continuously works to strengthen market quality and provide the optimal trading environment for listing and trading ETFs. In April 2021, in service of this goal, the NYSE introduced new requirements and incentives for its industry-leading NYSE ETF Liquidity Program, including the assignment of additional market makers ("Less Active ETF Leads") for new and/or low-volume ETFs.