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The Wall Street Journal: SEC developing pilot test of incentive-free trading

U.S. market regulators are developing a pilot program that would test exchange trading without the incentives markets pay to attract orders from high-frequency traders and other brokers, Securities and Exchange Commission Chairman Mary Jo White said Tuesday.

Ms. White said the three-member commission would consider implementing this year a recommendation from an industry advisory committee, which urged a test of trading without the system of fees and rebates known as “maker-taker” pricing.

Under that fee model, exchanges pay brokers for providing them with standing orders that help build a critical mass of trading interest, while brokers who “take” those orders pay a fee to the exchange.

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