Equity Exchange Fees and Revenues

22 Pages Posted: 7 Jun 2019 Last revised: 3 Aug 2019

See all articles by Ike Brannon

Ike Brannon

The Jack Kemp Foundation

Robert H. Jennings

Indiana University - Kelley School of Business - Department of Finance

Date Written: June 26, 2019


Fees charged by U.S. equity exchanges for services such as non-core market data, connectivity, and co-location have become controversial. Recently, the Securities and Exchange Commission required the exchanges justify hundreds of past fee increases. In their defense, exchanges argue that the fees that they charge are constrained by competition for order flow between the three major exchange families. To the authors’ knowledge, no extant work associates fee changes with exchange revenues. We gather fee increases and exchange financial statement information between 2006 and 2016 to examine the relation between fees and revenues. We find that, when statistically significant, revenue increases with fee increases without a consistently strong volume effect, which suggests that any decrease in subscriptions due to fee increases is more than offset by the revenue increase from the remaining subscribers.

Keywords: market data fees, equity exchange revenues

JEL Classification: G1, G2

Suggested Citation

Brannon, Ike and Jennings, Robert H., Equity Exchange Fees and Revenues (June 26, 2019). Kelley School of Business Research Paper No. 19-22, Available at SSRN: https://ssrn.com/abstract=3391834 or http://dx.doi.org/10.2139/ssrn.3391834

Ike Brannon

The Jack Kemp Foundation ( email )

1200 New Hampshire Avenue N.W.
suite 800
Washington, DC 20036
United States

Robert H. Jennings (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-2696 (Phone)
812-855-5875 (Fax)

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