Exchange Highlights

ETP volume surges, SEC proposes volume-based pricing changes

Nov 21, 2023

Exchange Highlights Logo

A Surge in ETP Volume and a Breakdown of the New SEC Proposal

Highlights & Recent Developments

  • MEMX Options now has 32 member firms
  • MEMX Equities
    • ETP volume surged to 24.4% of industry volume
      in October, up from 19.4% in September
    • Most active ETPs on MEMX included SPY, QQQ, IWM, TLT and TQQQ
  • SEC proposes restrictions on volume-based equity
    exchange pricing

MEMX Equities

MEMX exchange market share (excluding TRF volume) was 5.4% in October.  ETP volume reached its 2023 high point, hitting 24.4% of industry volume in October compared to 19.4% in September.

In October, MEMX traded in 2,698 ETPs. The most active by notional value included SPY, QQQ, IWM, TLT and TQQQ.

MEMX Options

MEMX Options launched September 27 and more symbols began trading throughout the month of October. Member participation has been diverse and enhancements continue to be implemented based on member feedback.

Data points in October included:

  • 32 member firms
  • 13 symbols actively trading
  • 88,800 trades
  • 788,890 contracts traded (both sides)
  • $111 million notional traded

Market Structure

On October 18th, the SEC issued a new proposed rule on volume-based equity exchange pricing. Key elements of the proposal include:

  • Agency-related volume: The proposed rule would prohibit
    U.S. equities exchanges from offering volume-based transaction fees, rebates, or other incentives (“volume-based pricing”) in connection with the execution of “agency related” order flow, which includes agency or riskless principal orders in NMS stocks.
  • Principal volume: The rule proposal would continue to allow exchanges to provide volume-based pricing for member principal volume, but exchanges would be required to publicly disclose the number of members at each tier.
  • Auction volume: The proposed rule also discusses concerns related to “auction linked pricing,” i.e., the anti-competitive practice of listing exchanges tying auction pricing to continuous trading volume. The SEC noted that no alternative to the listing exchange closing auction exists for LOC orders. This issue was raised by MEMX in response to the SEC’s December 2022 market structure proposals.
  • Options volume: The proposal also requests comments on prohibiting volume-based pricing for agency-related orders on options exchanges.

MEMX is discussing the proposal with members and will comment soon