Starting in February the Chicago Board Options Exchange plans to charge market makers and specialists quoting fees. The fees are expected to cover the cost of quote processing and discourage excessive quoting. Both strategies are essential for reducing quote traffic in the penny environment, which will be introduced in late January, officials said. The hybrid exchange will allocate a million quotes per acronym to each market maker and charge each member $450 a month for the allocation. Most large market makers on the CBOE generate close to a million quotes per month in each name they are responsible for. CBOE will charge three cents per every 1,000 quotes per acronym over the limit.

Some traders consider the new fees unfair. "The penny pilot is likely to generate more quotes for everyone, and who knows how much more quoting we'll have to do to be more competitive?" one market maker complained. Other options exchanges, including the Philadelphia Stock Exchange, have threatened penalties for excessive quoting as well (WSL, 8/14). None of the exchanges currently charge for quote processing.