The U.S. Securities and Exchange Commission is investigating whether the multi-tiered pricing system used by stock exchanges favors large brokers ...
NEW YORK: The U.S. Securities and Exchange Commission is investigating whether the multi-tiered pricing system used by stock exchanges favors large brokers at the expense of small ones, according to a person familiar with the matter.
SEC spokeswoman Judith Burns declined to comment. NYSE and Nasdaq declined to comment on the SEC probe into multi-tiered pricing. The regulatory scrutiny is part of a broader effort by the SEC under Chairman Jay Clayton to improve transparency around exchange pricing and ensure it is fair and equitable as required under the Exchange Act.
Some brokers say the exchanges have used their essential position in the market to maximize profits, often to the detriment of smaller brokers. Clearpool executes more than 2 percent of U.S. stock trades on an average day, but comes nowhere near hitting the higher-volume exchange tiers, which allow the biggest brokers to reap rebates nearly 60 percent higher than those that qualify for base rates, Wald said.
"These 3,762 variables strongly suggest that exchange prices are tailored and offered on a bespoke basis," the report said.
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