In a bid to boost volume on its electronic communications network, or ECN, brokerage firm
announced today it will be paying a rebate to its customers of 1 cent a share for limit orders placed on
. Tradescape normally charges a maximum commission of $7.95 a trade, which means an investor placing a 1,000-share
limit order would receive a rebate of $10 and actually net $2.05 on the trade.
MarketXT, which averages less than 5 million shares a day, is trying to compete with much larger ECN's like
, which average 100 million to 150 million shares a day, according to Rachael Fong, a Tradescape spokesperson.
In a statement, Omar Amanat, Tradescape's chief executive officer, said the rebate marked the first time that customers would get paid for order flow and would encourage the use of limit orders.
"Retail customers will now be encouraged and rewarded for placing limit orders, rather than being penalized and charged extra for limit orders like many of the traditional brokerage firms," Amanat said.
Founded in 1997, Tradescape has raised $100 million from investors including
Morgan Stanley Dean Witter
Salomon Smith Barney
. Tradescape acquired MarketXT last year.