What do you guys are thinking about this? As exchanges compete against each other for orders to pump up their data fees the market structure is becoming like supermarket introducing rebates. http://www.ise.com/assets/documents/AboutISE/PressRelease/CompanyNews/2010/20100329$ISE_to_Introduce_a_Modified_Maker_Taker_Fee_Schedule_for_Three_of_the_Most_Actively_Traded_Options_Products_on_its_Exchange.pdf NEW YORK, March 29, 2010 â The International Securities Exchange (ISE) today announced that it will introduce a modified maker/taker fee structure for options on the PowerShares QQQ Exchange Traded Fund (Nasdaq: QQQQ), Citigroup, Inc. (NYSE: C) and Bank of America Corporation (NYSE: BAC). Effective April 1, 2010, market makers that meet minimum quoting requirements will receive a $0.10 maker rebate for posting liquidity in these names.
There are too many exchanges. There needs to be another wave of mergers. The CME can be the only American exchange. Eurex can be the only European exchange. The Chinese can fight it out with Japan to be the sole Asian exchange. Then GS can unite all three under one umbrella.
Now, let we see how this will affect the market structure because paying rebates to MM for specific stocks will drive liquidity in these select stocks. From other side this liquidity and price structure is driven by different motives. From now on when you see a price action and increased liquidity in selected instruments this has to be interpreted differently.