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Sprecher of ICE Says Banning Maker-Taker Would Simplify Trading

IntercontinentalExchange Inc. CEO Jeffrey Sprecher
A file photo shows IntercontinentalExchange Inc. Chief Executive Officer Jeffrey Sprecher speaking during the Sandler O'Neill Global Exchange conference in New York during June 2008. Photographer: Jonathan Fickies/Bloomberg

Jeff Sprecher, whose purchase of NYSE Euronext made his IntercontinentalExchange Group Inc. the biggest owner of U.S. stock markets, said banning the pricing system that prevails on exchanges would simplify them.

The protocol of paying some brokers for providing standing orders to buy and sell shares while charging others to trade against them, known in the industry as maker-taker, could be prohibited without excessive deliberation, Sprecher said today at a Credit Suisse Group AG conference in Florida.

“You could really simplify the market by outlawing maker-taker pricing,” Sprecher said. “I don’t think it needs a holistic review” to do away with maker-taker, he said.

The 58-year-old ICE chief executive officer has emerged since the NYSE acquisition as a critic of modern exchanges, a landscape dominated by automated traders who supplanted human market makers after a decade of technology advances and congressional reform. Maker-taker, the pricing standard on most U.S. stock exchanges, has been linked to the explosion of computerized trading that has pushed daily volume on American exchanges above 6 billion shares a day.

Most stock exchanges charge about 30 cents per 100 shares to firms that trade against standing buy and sell requests while paying between 15 and 32 cents to brokers who supply them with liquidity, according to a Deutsche Bank AG report.

Dark Pools

Chris Concannon, an executive vice president at high-frequency trading firm Virtu Financial LLC, told Bloomberg News during an interview two months ago that regulators should review enacting a blanket reduction of the fees, which would also curb the rebates, because the structure distorts the market and results in more orders going to dark pools. Trading off exchange totals almost 40 percent of daily volume, according to data compiled by Bloomberg.

Sprecher’s ICE completed its purchase of NYSE Euronext in November. In public comments in October, Tom Farley, who became chief operating officer of NYSE after the acquisition, said that rules governing U.S. stock trading should be pared back because regulations have made the market too complex.

“There are some things that need to change for the betterment of everybody,” Sprecher said. “We are a fresh set of eyes on it.”

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