On March 14, the Securities and Exchange Commission proposed new Rule 610T of Regulation National Market System (Reg NMS), which would create a Transaction Fee Pilot program for all NMS stocks. The pilot program is designed to produce data on the effect of transaction fees and rebates on order routing behavior, execution quality, and market quality of the equities exchanges, including maker-taker exchanges.

In 2005, the SEC adopted Rule 610(c) of Regulation NMS to limit the maximum access fee that could be charged by maker-taker exchanges. The fee limit is imposed to ensure the fairness and accuracy of displayed quotations. The SEC now intends to launch a pilot program to determine if changes to Rule 610(c) or other regulatory action are needed.

To collect data, the proposed two year pilot program would include several test groups. One test group would prohibit rebates and linked pricing, and other groups would impose fee caps for removing and providing displayed liquidity. The pilot program would also have a control group in which the Rule 610(c) cap would continue to apply to fees for removing displayed liquidity.

Comments on the proposal should be submitted within 60 days of publication in the Federal Register. A link to the SEC proposing release is available here.