Competition in Make-Take Fees in the U.S. Equity Market

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Abstract
If changes in make fees have the same effect on exchange volume as changes in take fees, then any split of the total fee to makers and takers will generate the same revenue from these fees to the exchange. We find that both volume and revenue are not equally sensitive to changes in make fees and take fees. Keeping the amount of the total fee constant, a fee-structure change that favors takers leads to an increase in both volume and revenue. These relations are more pronounced when traders' response to fee changes is more likely constrained by the tick size.

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