ATS Drops Taker Fee10.25.2011
Omega ATS becomes the latest trading platform operator to switch to from a maker-taker pricing structure to taker-maker.
Omega ATS is removing fees on orders that take liquidity, essentially allowing these investors to trade for free.
“There’s a lot of choices when it comes to ATS’s in Canada, but not a lot of choice when it comes to pricing,” said Sean Debotte, director of business development at Omega ATS. “Most of it is maker-taker. We wanted to do something completely different, so we inverted our pricing model, and are now not charging anyone to remove liquidity. There was ample demand for this. We think having no cost is a similar advantage to giving a small rebate.”
Under Omega’s new pricing schedule, only the investor adding liquidity pays a fee. Passively executed orders for trades on equities below $1.00 will be charged $0.0002 per share, and trades on equities at or above $1.00 will be charged $0.0006 per share. This new model is aimed at benefitting liquidity posters seeking a venue that provides better price and time priority over one that provides rebates as incentives. It will take effect at the start of November.
Passive orders are those that are sent to a venue that is not immediately filled or executed. Active orders, which will no longer be charged a fee, are those are sent to match with an order waiting to be filled an exchange.
In the old pricing system, active orders were charged fees while passive orders were either free or given rebates.
While still one of the smaller alternative trading platforms in Canada, Omega ATS has gained substantial market share over the past year, according to the Investment Industry Regulatory Organization of Canada. It has more than doubled its sub-one percent share in the fourth quarter of 2010 to just over 2.1 percent as of the end of the third quarter this year.
Canadian rival Chi-X Canada last month also revised its pricing scheme for exchange-traded funds to a taker-maker model, providing a larger rebate to liquidity takers than liquidity providers. The Boston Options Exchange, which in 2009 made a shift in its focus toward the retail side, also switched to a taker-maker model, giving takers of liquidity an incentive to participate. The decision was made in part because of cost, as a maker-taker structure more benefits investors that are focused on low-latency strategies. Having to cater to the high-frequency trading community is one that is quite costly, having been described by market participants as an “arms race.”