Trader Talk

ICE CEO: We need changes in market structure

The New York Stock Exchange.
Adam Jeffery | CNBC

IntercontinentalExchange (ICE), the owner of the New York Stock Exchange, reported earnings this morning.

On the conference call, CEO Jeff Sprecher again reiterated comments he made shortly after buying the NYSE late last year.

First, he reiterated that "this market can be simplified and that the pendulum has swung too far on complexity."

Sprecher again argued for the elimination of maker-taker fees, which are fees the exchanges pay to market makers for providing liquidity (for providing bids and offers) and charge for taking liquidity (for hitting those bids and offers).

Sprecher argues that those fees create incentives for intermediaries to place their own interest ahead of their customers, because they may route orders to places where the largest rebates could be collected.

Sprecher also argues the large number of order types makes the market excessively complicated. As a first step toward making the markets less complex, he said ICE would voluntarily reduce the number of order types at its U.S. equity exchanges. He said they have identified over one dozen existing order types that they will apply to the SEC for rule changes to eliminate, and they will continue to evaluate other order types that may not be providing any value to the market.

He also said exchanges and dark pools should adopt a moratorium on creating any new types of orders.

Calling for elimination of maker/taker fees is not a small step. It is a significant part of ICE's revenues. U.S. cash equities are about 6 percent of ICE's revenues; essentially all of it is from maker/taker fees.

This also puts him at odds with other exchanges. BATS, for example, continues to support the maker/taker model.

While it is unlikely the SEC will move aggressively against maker/taker this year, this is an important voice calling for change.