US options exchange officials have blasted the US Securities and Exchange Commission (SEC) for its lack of oversight regarding payment for order flow and order internalisation.
At the recent FIA conference in Boca Raton, exchange leaders from Chicago Board Options Exchange (CBOE), International Securities Exchange (ISE) and Philadelphia Stock Exchange (PHLX) each strongly criticised the regulator for not doing enough to stop the practice of payment for order flow, whereby market makers pay brokers to send orders to them. Some exchanges have facilitated the practice by providing bookkeeping services for its market makers.
"I don't know what deal was made between the market makers and brokers," said Sandy Frucher, PHLX chairman and ceo...