The no. 4 U.S. stock exchange operator Direct Edge said it plans to provide free trading at the close markets in the direct pricing challenge to the New York Stock Exchange and the Nasdaq, the news reports said.
The New York Stock Exchange, owned by NYSE Euronext, and the Nasdaq, owned by Nasdaq OMX are the only exchanges that execute closing orders.
Direct Edge said, "The lack of competition on the market close has allowed the legacy exchanges to charge significantly more for end-of-day orders then they do for intra-day orders."
Bryan Harkins, Chief Operating Officer at Direct Edge said, “Our members are not happy with the costs of participating on the NYSE and Nasdaq closes.”
Mr. Harkins also said, “If we inject pricing competition there, the end result is we are going to grow market share, but also, it should act as a catalyst to keep their fees in check.”
The company also plans to allow closing orders to be placed up to a cut-off time just ahead of cut-off times at NYSE and Nasdaq.
The buy and sell orders would be paired to the extent possible and executed once the closing price was posted.
The unmatched orders would be routed to the primary listing market as market-on-close orders in advance of their respective cut-off times.
Nasdaq nets a tenth of acent or $0.001 for the clients who trade below a certain amount per closing order, on both buy and sell sides.
Direct Edge is a Jersey City-based stock exchange operating two separate platforms EDGA Exchange and EDGX Exchange. Since March 2009, the company has had a market share in the range of 9%-12% of U.S. equities trading volume and regularly trades 1 billion to 2 billion shares per day.