The International Securities Exchange last week increased its payment for order flow (PFOF) fees to 65 cents per contract from 55 cents per contract to remain competitive. Additionally, for the first time in its six years of running a PFOF program, ISE last week began charging PFOF fees on complex orders, officials. Market makers will pay the same 65 cents per contract. "ISE is committed to matching other exchanges' PFOF programs in order to maintain its competitive position," officials wrote in a recent Securities and Exchange Commission filing. In PFOF programs exchanges pay brokerages to route their order flow to their market makers and charge the market makers for the service.

The ISE's biggest rival, the Chicago Board Options Exchange, raised its fees to 65 cents this spring. The larger the fee, the more money the exchange can pay to ensure market makers are attracting orders. ISE will consider further increasing the fee if competitors raise theirs. The American Stock Exchange--the fourth largest options exchange by volume-- is instituting a 75-cent fee this month (WSL, 6/30).