The head of the New York Stock Exchange said a proposal to overhaul the fee-and-incentive system it uses to get paid for trading would hurt investors and drive trading into the shadows.

Last week, a committee advising the U.S. Securities and Exchange Commission proposed a pilot program to evaluate changes to the so-called maker-taker system, a key way stock markets charge for trades and attract volume to their venues. Speaking at a meeting of that group in Washington, NYSE Group Inc. President Tom Farley said Tuesday that the plan would take the industry down the wrong path.

“We were very disappointed,” Farley, whose exchanges handle almost a quarter of U.S. stock trading, said of the proposal. “Simply stated, this access-fee pilot will not only ensure that there will be more dark trading but also that there will be worse prices on exchanges and off-exchanges.”

Stock exchanges that use maker-taker charge some traders for placing orders and pay others who make those trades happen. Farley said the proposed test, which would lower those fees, could lead to higher costs for investors and push transactions onto private trading platforms.

Conflict of Interest

Critics say the exchange fee system creates conflicts of interest in how brokers send out orders. To respond to these concerns, regulators have spent years weighing how to set up a trial program to challenge the pricing model.

One of the SEC advisory committee’s four specialized subgroups outlined a test program to lower access fees in a memo last week. The suggested plan would last between one and two years and would be killed early if retail investors felt any negative effects. The pilot would still need approval from the SEC. The group is made up of representatives from firms including brokers and trading firms. Bloomberg LP, the parent of Bloomberg News, is a member.

A Nasdaq Inc. executive joined Farley in criticizing the proposed plan, saying the advisory group was focusing on improving a system that already works pretty well for investors. Nasdaq experimented with its own access fee changes in a program that was first proposed in 2014.

“None of the preliminary recommendations specifically aims at improving market structure for emerging-stage, high-growth companies,” said Jeffrey Davis, Nasdaq’s vice president and deputy general counsel. Instead, he said, “they accept the one-size-fits-all equity market structure and attempt to change certain elements of that market structure that already appears to serve issuers extremely well.”

Other speakers had a more positive spin on the test.