Chicago Board Options Exchange (CBOE) announced to members
it will initiate a new payment for order flow programme
beginning on 1 June.
Under the new CBOE plan, market makers that participate in
payment for order flow will be charged 40 cents per contract on
every order received. Payment for order flow is used by options
exchanges and some market makers whereby they pay a broker's
firm for routing an order to them.
However, trades for example with Morgan Stanley, which does
not accept payment for order flow, will not be charged the fee.
Under the old system, a so-called "marketing fee" was charged
on every trade. The new programme will be implemented in every
CBOE pit for 90 days. After that, each pit will vote
individually to keep or eliminate the payment for order flow
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