08.24.2011
By Terry Flanagan

DirectEdge Maintains Flexibility

Dual exchange operator DirectEdge is constantly evaluating and adjusting its business model as the overall market landscape changes.

“One thing that we always try to do no matter what, in an ultra-competitive market, is we try to always respond to the customer needs of the day,” said Bryan Harkins, chief operating officer of DirectEdge. “We set our rates according to the times, so if the market volumes are trying, we adjust our rates accordingly. We have various pricing tiers, which allow members to take advantage of lower rates and enjoy price savings, when they reach different thresholds and tiers. In the past, tiers were static, so we modified tiers to fit with market vols. They will float up and down as a percentage. So if you’re a customer, and if you do the same relative percentage, you will enjoy those savings. They don’t have to hit these super high, unachievable bogeys when the market is fluctuating.”

In addition to adjusting its pricing structure depending on the current market conditions, DirectEdge also will adjust its pricing model if it is deemed necessary.

Since the start of August, EDGA, which is one of the company’s dual trading platforms, went from a taker-maker model to a maker-taker model, which incentivizes those who provide liquidity.

“We’re shifting the economics back to provider, and providing small rebate to provider and not the taker,” said Harkins. “Why did we do that? It’s indicative of the times. There are various liquidity needs, so there are many different exchanges catering their pricing models to trading groups.”

However, since it is always looking to adjust its business model with the times, it is not against switching back to the taker-maker model if it sees fit. “If the market were to change again, we would rethink that,” said Harkins.

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