DIRECTEDGE ECN CHANGES REBATES, ROUTING AND ACCESS FEES; PREPARES TO FILE TWIN APPLICATIONS FOR EXCHANGE STATUS

Posted April 29, 2008

NEW YORK – DirectEdge ECN LLC is raising its standard routing rate for its EDGX and EDGA platforms and standardizing its base fees and rebates on the EDGX platform. The ECN is also preparing to file two separate applications with the US Securities and Exchange Commission seeking exchange status for its platforms.

“We hope to file the two applications simultaneously within weeks,” says William O’Brien, Chief Executive Officer, DirectEdge ECN. In November 2007, competitor BATS ECN filed for exchange status, an application pending before the SEC.

Exchange status gives electronic trading venues greater control over their own place in the market structure and confers the economic benefits of market data revenue, and lower clearing charges.

“Just as importantly, for the long term, it gives us much greater freedom of action if we want to look at product expansion, both into options, where there is no notion of over the counter options and you always have to go through an exchange book,” says O’Brien. Exchange status also holds international opportunities. “You have an era of mutual recognition [among regulatory bodies],” adds O’Brien. “Exchange status will give us greater freedom of action globally.”

Meanwhile, effective May 1, the standard base rebate on EDGX will be 0.25 cents ($0.0025) per share and standard base access fee will be 0.26 cents ($0.0026) per share. The standard routing rate for EDGX and EDGA will increase to 0.29 cents ($0.0029) per share.

“Our approach reflects what we believe is a real opportunity to stake out a healthier balance in the wake of the pricing changes of others that are chasing market share exclusively through the raising of rebates, and corresponding increase in access fees,” says O’Brien. “Rebates do matter, but a good trading experience takes several factors into account, including fill rates and fill priority. The cost proposition for liquidity removers can have as much impact on the trading experience of liquidity providers as the rebate you pay them.”

DirectEdge is also creating a tier where customers who add a combined 40 million shares per day on its platforms will get a rebate of 0.29 cents ($0.0029) per share on EDGX. “With the ‘super tier,’ we thought it important to make clear our commitment to bringing on the higher-frequency firms that have historically not used DirectEdge in a significant way,” says O’Brien.