NEW YORK (Reuters) - A proposed regulatory experiment to test the effects of lowering stock exchange fees could end up making stocks harder to trade and should be delayed pending a comprehensive market review, the three largest U.S. stock exchange operators said in a letter to the Securities and Exchange Commission.

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, DC, U.S. on June 24, 2011. REUTERS/Jonathan Ernst/File Photo

Forcing exchanges to lower the fees they charge for matching buy and sell orders would also cut into the amount of rebates the exchanges could pay market makers, the brokers who provide buy and sell quotes, the exchanges said in the Oct. 13 letter.

"Harming this critical component of our markets could have unintended cascading and irreversible effects," said the letter by the heads of the New York Stock Exchange, which is owned by Intercontinental Exchange ICE.N; CBOE CBOE.O, which owns No. 2 U.S. stock exchange Bats; and Nasdaq Inc NDAQ.O.

The three exchange operators collectively pay around $2.5 billion a year in rebates, which they say compensate market makers the risks of providing liquidity. Without that additional liquidity, investors, listed companies, and exchanges would all suffer, they said.

Critics say those payments create conflicts of interest by giving incentives for brokers to send their customers’ orders to the exchanges with the biggest rebates rather than to exchanges that would get the best result for the end clients.

Currently, the fees exchanges can charge for trades they execute are capped at 30 cents per 100 shares. Rebates, which not all exchanges pay, are generally in line with the fee cap.

A so-called access fee pilot, proposed in July 2016 by a committee of market experts picked by the SEC, would test capping fees as low as 2 cents per hundred shares for some stocks, reducing the amount of funds available to pay rebates.

The exchanges also said that without the ability to pay rebates, it would be harder for them to compete with private broker-run trading venues, known as dark pools, which have fewer regulatory burdens.

The SEC should proceed with the pilot only as part of a much broader market review, and not in isolation, they said.

SEC Chairman Jay Clayton said in July that a proposal for the pilot would be tabled in the coming months and that there seemed to be a consensus in the market on going ahead with the plan.