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...