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The industry seems to be coalescing around the idea of eliminating maker-taker as a first step in US equity market structure reform. Congress is asking for a pilot. Nasdaq started one unilaterally. NYSE proposed capping fees and eliminating rebates, and BATS is onboard with a tiered cap. It’s fine as far as it goes, but we haven’t seen a proposal that properly addresses the interests of investors and the buyside.

As a matter of principle, we

Last Friday, the SEC’s Market Structure Subcommittee released its draft recommendation on decimalization and tick sizes. In a refreshingly clear analysis, it recommended that the SEC not experiment with artificially increasing the tick sizes for small-cap companies.

“Engaging in pilot programs, when we know what occurs from prior experience (and it is not good for investors) seems unjustifiable.

The basic question at issue is whether increasing tick sizes of small-cap stocks to a nickel (or more) will help

The buyside has many interrelated concerns around the US equity market structure: high frequency trading, latency advantages, complex exchange order types, brittleness in the market resulting in “mini flash-crashes,” the sequestration of liquidity in darkpools, and the maker-taker model, among others. But one area that touches each of these but receives little attention is the role of the broker.

The buyside interacts with the market using brokers as their agents. When a buyside trader hands an order to a broker’s