Access Fees and Regulatory Structure of Trading Venues

by WilmerHale

On October 27, 2015, the Equity Market Structure Advisory Committee (EMSAC or Committee) held its second meeting at the Securities and Exchange Commission (Commission or SEC) in Washington DC.1 The Committee is considering whether various regulatory or industry initiatives would improve the function of the US equity markets. At this meeting, the Committee focused on (1) market access fees and the maker/taker fee model and (2) the regulatory structure of trading venues. The Committee also discussed issues raised by the market disruptions that occurred on August 24.2

As an advisory committee to the SEC, EMSAC is organized and operates pursuant to the Federal Advisory Committee Act.3 Accordingly, the Committee’s proceedings are open to the public, and the Committee, while not a formal rulemaking body, ultimately will make recommendations to the Commission for possible action. Market participants with a significant interest in any of these topics therefore should consider whether and how (e.g., a white paper or comment letter) to make their views known to the Committee in a timely manner.4

Opening Remarks

Each Commissioner gave opening remarks discussing his or her views on how the Committee can assist the Commission in improving the equity markets. Chair Mary Jo White opened the meeting by recognizing how “invaluable this Committee’s insights are as the Commission continues its efforts to ensure that the equity markets optimally meet the needs of investors – both large and small – and issuers of all sizes.”5 Commissioner Luis Aguilar emphasized that two recent market disruptions—the market events of July 8 and August 24—highlighted the need for market structure improvements, including improved contingency plans for market openings and closings. Commissioner Kara Stein echoed the sentiment that the August 24 events underscored the need for the Committee’s input on market structure issues. Commissioner Michael Piwowar noted that the SEC’s website lists only three equity market structure accomplishments and indicated his hope that the Committee would add significantly to that list.

Access Fees/Maker-Taker Model  

In response to comments during the EMSAC’s inaugural meeting that a discussion of maker-taker fees was “essential for any thorough assessment of market structure,”6 the Committee members and panelists discussed the advantages and disadvantages of the widely used maker-taker fee structure. Although there are multiple variations on the theme, the maker-taker pricing model generally involves the offering of rebates to market participants providing liquidity (makers) and the charging of fees to market participants obtaining access to the liquidity (takers).7 Critics of the maker-taker model argue that it creates inherent conflicts of interest between brokers and their customers, distorts order routing decisions, and unnecessarily increases market complexity. Proponents, on the other hand, believe that the maker-taker model promotes tight spreads and enhances competition among trading venues.

In light of the differing views of maker-taker fees, Committee members varied on how they would address any concerns raised by the fees. Some Committee members called for the elimination of this fee structure entirely, arguing that it adds unnecessary complexity to the markets. Other members argued that the maximum access fees set forth in Rule 610 of Regulation NMS (e.g., $0.003 per share, if the price of a protected quotation or other quotation is $1.00 or more) is based on outdated information about the market and should be reduced to reflect current trading patterns. 

Given the complexity of the issues, and concerns about unintended consequences of any changes to the regulatory requirements related to access fees, many panelists and EMSAC members supported the Commission’s use of a pilot program to test any proposed changes to access fees prior to their implementation. In doing so, the Committee members, along with Chair White, emphasized that the design of any potential pilot is critical to its usefulness. For example, Committee members encouraged the application of the pilot to a broad universe of stocks, thereby facilitating an analysis of the effect of the fees on securities with different trading patterns. In addition, certain members advocated including a trade-at component in a pilot, while others argued that it introduced unnecessary complexity and could hinder the Commission’s ability to attribute findings to specific factors, i.e., it would be difficult to understand whether a particular result derived from changes to the maker-taker model or the introduction of the trade-at component.

Regulatory Structures of Trading Venues

Next, the Committee discussed the regulatory structures applicable to exchanges, alternative trading systems (ATS), and the national market system plans (NMS Plans). The Committee primarily focused on three areas during the discussion: (1) the harmonization of the regulatory requirements applicable to exchanges and ATSs; (2) increased liability for exchanges; and (3) the governance and operation of the NMS Plans that provide market data via the securities information processor (SIP). 

As noted by Chair White, “perceived differences between the services provided by exchanges and ATSs and their respective roles in the equity marketplace have diminished.”8 Yet, as Committee members and panelists noted, exchanges and ATSs are subject to differing levels of regulation. For example, exchanges are required to file their rules with the SEC and to regulate their members, while ATSs must comply with Regulation ATS, including filing Form ATS and Form ATS-R, and applicable broker-dealer requirements (e.g., best execution). ATSs, however, are not required to make their rules of operation public or to file changes to those rules with the SEC, nor are they required to regulate their subscribers. Given the similarity in services provided by ATSs and exchanges, the EMSAC members and panelists discussed whether there is a need to harmonize the current methods for regulating ATSs and exchanges.

In discussing the potential harmonization of regulations, Committee members and panelists emphasized the importance of considering the differences between brokers and exchanges. Panelists and EMSAC members also highlighted areas of potential and future ATS regulation, such as requirements to provide more detailed descriptions on Form ATS and to publicly disclose the more detailed Form ATS. Panelists also discussed the ATS volume reporting initiatives of FINRA. 

Committee members noted that the securities industry is the only industry where for-profit public companies regulate their members and competitors, and questioned why it must be done in this manner. In response, panelists explained that exchanges are best positioned to surveil their markets—exchanges’ regulatory systems are built into their matching systems—and that the existence of competition for regulation has created better results while saving Commission resources. One panelist explained that self-regulatory organizations (SROs) are the most regulated securities entities and changing this current structure would create a race to the bottom.

Panelists and EMSAC members also discussed exchange liability limitations. There was general agreement that for-profit exchanges should have appropriate liability limits, and that there should be certain areas where exchanges have immunity and other areas where liability is appropriate. One panelist suggested defining exchange functions as either core or non-core, and granting immunity from liability for core functions and permitting limited liability for non-core functions. One Committee member questioned whether exchanges should be subject to capital requirements when they are subject to higher liability thresholds and whether such a requirement would create a greater barrier to entry.

With respect to market data, panelists and EMSAC members agreed that regulatory efforts should be directed toward enhancing the governance structure of the NMS Plans overseeing market data, with a focus on the cost of market data. Committee members expressed concern with recent increases in the SIP’s market data-related fees, despite decreases in technology costs and other costs related to the production of the market data as well as the decrease in the market value of the SIP market data compared to direct market data feeds. In addition, one panelist expressed concern about the conflicts of interest in the governance of the NMS Plans: (1) NMS Plan participants are exclusively SROs that are not incentivized to be competitive in the operation of the NMS Plans; and (2) NMS Plan participants generate revenue based on the sale of direct market data that conflicts with the market data provided via the NMS Plans. To resolve these conflicts, the panelist suggested changes to the governance structure of the NMS Plans, including adding representation from broker-dealers and asset managers and removing the unanimous voting requirement.

August 24, 2015 Market Volatility

The Committee discussed the volatility experienced by the markets on August 24, 2015. With the majority of the trading halts affecting exchange traded products (ETPs) and exchange traded funds (ETFs), Committee members urged the Commission to consider market structure issues specific to ETPs and ETFs. One EMSAC member urged the Committee to consider ETPs and ETFs in various classes (e.g., cash, fixed income, emerging markets) when making assessments and to harmonize the following around ETPs and ETFs: (1) the requirements of Limit Up/Limit Down; (2) the modernization of Regulation SHO; (3) the ability to adjust trades under clearly erroneous guidelines; (4) the automation of indications under NYSE Rule 123D;9 and (5) the education around order messages. In addition to the assessment of market structure in light of ETPs and ETFs, Committee members noted two lessons learned from August 24—the need to open markets on time and the need to fine tune the re-opening process after a trading halt.

Next Steps

Going forward, the EMSAC will create subcommittees to consider particular issues and will provide the Commission with recommendations periodically. The Committee also will schedule the dates for future EMSAC meetings, with the goal of holding quarterly discussions. During these discussions, the Committee and any subcommittees are prepared to consider issues raised in public comments submitted to the EMSAC.

1 The EMSAC is comprised of senior executives from large institutional broker-dealers, self-regulatory organizations, an ATS, technology firms, and the AARP, along with academics with specialties in economics, finance, financial engineering, computer science and artificial intelligence, and law. Certain Committee members and Commissioners expressed concern that the composition of the Committee did not provide sufficient representation of all relevant categories of market participants. See  EMSAC Spotlight Page, SEC, (last modified Oct. 27, 2015).
2 The Committee focused on the Order Protection Rule of Regulation NMS in its first meeting. See Andre Owens, Bruce Newman and Mahlet Ayalew, WilmerHale, SEC Equity Market Structure Advisory Committee: Assessing Complexity in the U.S. Equity Markets (May 21, 2015), (available here).
3 See Federal Advisory Committee Act, 5 U.S.C. app. §§ 1-16 (2015).
4 Comments submitted to the Committee to date are available on the SEC’s EMSAC Spotlight Page, as are instructions for submitting public comments.
5 Mary Jo White, Chair, SEC, Opening Remarks at the October 2015 Meeting of the EMSAC: Optimizing our Equity Market Structure (October 28, 2015) (“Opening Remarks of Chair White”), (available here).
6 Id.
7 Inverse maker-taker pricing models in which the provider or maker of liquidity is charged a fee and the user or taker of liquidity is provided a rebate also exist.
8 Opening Remarks of Chair White, supra note 5.
9 NYSE Rule 123D provides requirements related to the openings and halts in the trading of a security.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© WilmerHale | Attorney Advertising

Written by:


WilmerHale on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.