The Wall Street Journal: NYSE mulling flipping standard fee model with newest exchange

The New York Stock Exchange is considering a time-honored move to boost market share: copy an innovation from competitors.

NYSE has approached market participants about launching a so-called “inverted” exchange, a move that would borrow from the playbook of rivals Nasdaq Inc. NDAQ, +0.10%   and Bats Global Markets Inc. BATS, -0.34%  , people familiar with the situation said.

Inverted or “taker-maker” exchanges flip the standard fee model of U.S. equities trading on its head.

Most U.S. exchanges collect a “taker” fee for each incoming trade that immediately executes against a standing buy or sell order posted on the exchange, removing it from the exchange’s order book. Meanwhile, the exchange pays a “maker” rebate to the firms that posted those orders in the first place. The idea of the model, called “maker-taker,” is to encourage firms to quote more competitive prices for the securities traded on the exchange.

In contrast, an inverted exchange pays rebates for incoming trades that execute against standing orders, while charging the firms that posted those orders — the opposite of maker-taker.

An expanded version of this article appears on WSJ.com.

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