NYX Nyse Euronext

The U.S. Securities and Exchange Commission on Wednesday voted 5-0 to propose new rules to cap trading fees for customers of some options exchanges at 30 cents per contract.

The proposal seeks to more closely align the actual cost of executing an options trade with the additional costs of accessing quotes on exchanges and the wide range of fees charged by different markets, according agency documents.

"In practice, the displayed quotation on an options exchange may not reflect the actual amount a person will pay to buy or sell the option," SEC staff wrote in a summary of the proposal.

"Instead, the person often incurs additional costs to conduct the transaction, including the cost of accessing the exchange's quotation."

The proposal addresses a long-simmering debate in the options industry over whether or not exchange fees should be assessed in a way that is similar to the U.S. stock market.

SEC Chairman Mary Schapiro said the proposed rule is designed to "ensure that the total cost of the transaction does not vary significantly from the displayed price" and "ensure greater transparency in the cost of accessing quoted prices."

The new rules would target options markets running a so-called maker-taker pricing model, in which market makers receive rebate payments from the exchange to provide liquidity to the market, and customers are charged fees for trades that remove liquidity.

Those fees, according to the SEC, aren't part of the displayed quote, and can make it harder for investors to figure the exact cost of doing business.

The proposed rule would cap access fees at 30 cents per contract, and extend rules prohibiting exchanges from imposing "unfairly discriminatory terms" to cover options trading. The fee cap would apply to any fee based on the execution of an incoming order against an exchange's best bid or offer.

SEC staff said they proposed the 30-cent figure because they want actual prices to be closer to the displayed price than the next higher or lower price. The 30-cent figure also is consistent with the fee caps already used for stock trades.

The SEC is seeking comment from industry participants and other stakeholders on whether the 30-cent cap is the appropriate figure before finalizing the rule.

Maker-taker pricing has been around for years, but has picked up steam recently.

NYSE Euronext's Arca platform is the largest U.S. options exchange by volume that runs a pure make-or-take model, but January saw Nasdaq OMX Group Inc. (NDAQ) roll out such pricing at its PHLX platform, and the International Securities Exchange has introduced its own version as well.

Smaller exchanges, including the Nasdaq Options Market and BATS Options, also run full maker-taker venues.

Separately, the SEC also voted 5-0 to propose a rule to require firms engaged in high-frequency trading to carry unique identifiers, enabling regulators to more closely track their activities in U.S. markets.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

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