How Does an exchange’S Fee Structure Influence a Market Maker’s Quoting Strategy for Options?

The exchange's fee structure, particularly maker-taker fees, is a direct cost input for the market maker. Lower maker fees (or rebates) incentivize market makers to post tighter quotes (narrower bid-ask spreads) to attract order flow.

High taker fees discourage aggressive hedging or liquidation, potentially leading to wider option spreads to cover the increased transaction costs. The fee structure is a key determinant of quoted liquidity.