Market Update

Key Takeaways:

• Heightened volatility in Q2 2022 has widened spreads and made quotes less stable, thereby increasing the implicit costs of trading.
• However, the availability and relative quality of intraspread liquidity—including midpoint—has remained consistent while savings in basis points has increased.
• Talk to your broker about how they configure their algos, and if they would consider overweighting intraspread order placement as a possible way to reduce trading costs.

In a long-awaited decision impacting trading and market structure, on May 24, the US Court of Appeals for the District of Columbia Circuit denied a petition filed by several exchanges challenging the SEC’s “market data infrastructure rule” (“Rule”).

The exchanges claimed that the rule was arbitrary and capricious and contrary to the goals and policies of the Securities Exchange Act.  

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The Court, however, found that the Rule “clearly represents a reasonable balancing of the objectives Congress directed the Commission to address in a complex and technical area based on the record before the Commission.”